In October 1985, Edward Blake’s murder is being investigated by New York City police who have very little information to go on. Rorschach, an outlawed vigilante, is making his own enquiries into the murder and discovers that Blake is the alternative identity of a costumed hero employed by the U.S. government known as The Comedian. Rorschach, thinking he has uncovered a plot to eliminate costumed heroes, sets out to warn his former comrades; Daniel Dreiberg formally known as The Nite Owl; Doctor Manhattan, an emotionally detached god-like being, his lover Laurie Juspeczyk formally known as The Silk Spectre and Adrian Veidt a successful businessman formally known as the costumed hero Ozymandias, the world’s most intelligent man.
During a live interview on national television, Doctor Manhattan is accused of being the cause of cancer in friends and former colleagues. In response to the accusations, he exiles himself to Mars and in so doing throws the world into political turmoil, with the Soviet Union invading Afghanistan to capitalize on the perceived U.S. weakness. Adrian Veidt narrowly survives an assassination attempt which validates Rorschach’s conspiracy theory and Rorschach himself is framed for murdering a former super-villain known as Moloch The Mystic.
With Doctor Manhattan in self-imposed exile, Juspeczyk gets closer to Dreiberg and the two don their old costumes and return to vigilantism. They start to accept aspects of Rorschach’s paranoid theories and proceed to break him out of prison. After reviewing his own personal history, Doctor Manhattan teleports Juspeczyk to Mars so she can plead her case for him to save the world from nuclear annihilation. During this argument she learns that The Comedian, who sexually assaulted her mother, was in fact her real father. She is traumatized by this revelation which demonstrates the complexity of human emotions to Doctor Manhattan and reignites his interest in humanity.
Back on earth, Nite Owl and Rorschach discover evidence that Adrian Veidt may be behind the conspiracy surrounding the murder of The Comedian and the false accusations that forced Doctor Manhattan into exile. Rorschach mails his journal containing his suspicions to the New Frontiersman newspaper, then he and Nite Owl confront Veidt at his Antarctic retreat. Veidt reveals that his master plan to save the world from nuclear annihilation is to fake an alien invasion of New York which would devastate the city but in the process unite the planet against a perceived common foe. Veidt also admits that he was responsible for The Comedian’s murder, Doctor Manhattan’s friends and colleagues contracting cancer, his own faked assassination attempt and Rorschach being framed for the murder of Moloch all in order to keep his plan from being revealed. Rorschach and Nite Owl respond by attempting to stop Veidt only to learn that it is too late and his plan is already in progress.
Doctor Manhattan and Juspeczyk return to earth to find New York City in ruins. Realising that his abilities are being affected by Tachyons emanating from the South Pole, Doctor Manhattan teleports with Juspeczyk to Antarctica and the pair discover Veidt’s master plan. After seeing the world’s news broadcasts which report an end to global hostilities, everybody agrees that it would be in the interest of world peace for them all to remain silent. Rorschach disagrees and heads off to reveal the truth. Doctor Manhattan confronts Rorschach who refuses to compromise which leads to him being vaporized. Doctor Manhattan returns to Veidt who is struggling with his conscience and asks if he did the right thing. Doctor Manhattan cryptically responds with, “Nothing ever ends” then teleports to another galaxy to create new life.
Dreiberg and Juspeczyk go into hiding and continue their romance under new identities. The novel ends in the New Frontiersman newspaper office. The editor is complaining about having to cancel a two page article since the end of the nuclear arms race. He tasks his assistant with filling the gap from the Crank file. In the final frame the assistant is reaching towards a pile of documents and close to the top is Rorschach’s journal.