An alien lifeform, much like a fungus or spore, clings to the space shuttle Patriot as it crashes back to Earth, spreading tainted debris from Texas to Washington, D.C. Curious onlookers steal, touch and even sell the parts on eBay, much like what happened with the Columbia disaster. This in turn infects many people, robbing them of their emotions when they enter REM sleep.
One of the first people infected is Tucker (Jeremy Northam), a CDC director investigating the crash. Once he is overcome, Tucker uses the CDC to spread the disease further, disguising the spores as flu inoculations. In a panic from a made-up "flu bug," people rush to get "inoculated," later becoming pod people when they sleep that night.
Tucker's ex-wife, psychiatrist Carol Bennell (Nicole Kidman), knows something is amiss and, after locating several patients who say their loved ones are "imposters," teams up with love interest and fellow doctor Ben Driscoll (Daniel Craig) to uncover what is really going on.
With the help of Ben's friend Galeano (Jeffrey Wright), a biologist, they find out about the spore and discover that it takes over the brain during REM sleep. They also find out that people who have suffered diseases that affect the makeup of the brain, such as syphilis or ADEM, are immune to the spore because their previous diseases prevent the spore from "latching on" to the brain matter.
Carol's son Oliver (Jackson Bond) is immune to the spore because of scarlet fever-type symptoms he had as a young child. Also seen immune is one of Carol's patients, Wendy Lenk, who escaped to her sister's house. On her way to her office, Carol sees several people crying and distraught and a homeless man having some sort of fit.
When she gets to her office, Carol remembers what Wendy said about her husband not being her husband and searches on the Internet for similar responses. Suddenly, her secretary (infected) makes her favorite tea and infects it to spread the disease to her. Carol is about to drink the tea but receives a call from Ben and she leaves.
Carol meets with Ben, Ludmilla, Stephan and Ludmilla's aide Jill and witness Yorish's transformation into one of the infected. Carol attempts to take a photograph of him, partially bringing him out of REM sleep and causing him to have a cardiac arrest. Carol then leaves to get her son back from Tucker. When she arrives at his house, he and several colleagues attempt to seize her and he infects her by spitting on her face. She escapes and returns to Nem at Ludi's house.
They leave when Henryk returns, infected with some other people. Stephan and Jill safely arrive at a base outside Baltimore where they and several Nobel Prize winners attempt to make a cure for the alien virus. Carol and Ben separate to find Oliver, who tells Carol his location by texting her. She is chased by several infected and pretends to act infected when Gene, Tucker's neighbor's child, finds her.
He takes her back to Tucker's mother's house, where the four dine. Carol pretends to be one of them, and secretly tells Ben her location. She finds Oliver in a back room and they reunite. Gene interrupts them, and Carol knocks him out and leaves with Oliver. She sees several normal people attempting to pose as infected, including one woman who is dragged out of her car, another who two cops chase down and subdue.
To help stay awake, Carol heads to a pharmacy and takes an assortment of prescription amphetamines from Ritalin to Dexedrine. She encounters Ben, who has come to seek them, but discovers that he is infected. She uses the gun retrieved earlier from an infected/transforming police officer against Ben and several people who she locked inside a closet.
She kills them all except Ben, who she shoots in the leg. Shortly after a brief fight to get away, some of Ben's colleagues pick up the two on a rooftop via helicopter. They head with Galeano at the base of operations. Scientists use Oliver's blood to create a airborne vaccine.
Because the spore latches on to the brain during REM sleep, no one remembers a thing when they are cured. They feel as though they have woken from a dreamless nap. Both Ben and Carol are actually sympathetic towards the pod people and what they had to offer through a perfect world at the end of the movie, when they read the paper and see "business as usual" (other tragedies, war, violent news, etc.).