In the 1990s, U.S. National Security Agency official Thomas Bryan Reynolds (Jon Voight) meets with U.S. Congressman Phil Hammersley (R-NY) (Jason Robards) in a public park to discuss support for new counter-terrorism legislation the U.S. Congress is pushing that dramatically expands the surveillance powers of intelligence agencies on individuals and groups. Hammersley remains committed to blocking its passage, since he believes it would almost totally destroy the privacy of American citizens. Reynolds, determined to have the bill pass so as to gain a long-delayed and anticipated promotion, has his team murder Hammersley, spread heart pills over his car, place him in the car and push it in a lake to make it look like he had a heart attack. In the aftermath, they discover too late that wildlife researcher Daniel Zavits (Jason Lee) had a camera aimed in the woods at their location. Zavits inspects the footage and, realizing he has captured the congressman's murder, calls a journalist he knows. The call is monitored by Reynold's team who attempt to break into his apartment to retrieve the tape. Realizing he is in grave danger, he transfers the video to a ZIP disc and places it into an NEC Turbo handheld before fleeing the apartment ahead of Reynolds's men.
Zavits is eventually killed when he runs into the street in front of a fire truck but immediately prior, he bumped into an old college friend, labor lawyer Robert Clayton Dean (Will Smith), and slipped the disc into his shopping bag without his knowledge. When the NSA discovers that Dean might have the video, Reynolds's team raids his house and plants surveillance devices, but the video does not turn up. The NSA then disseminates false evidence to implicate Dean of working with the mob family of Boss Paulie Pintero (Tom Sizemore) and seeing Rachel Banks (Lisa Bonet), an ex-girlfriend he had an affair with. The subterfuge destroys Dean's life: he is dismissed from his job, his bank accounts are frozen, and his wife Carla (Regina King) throws him out of the house.
Dean believes Pintero is behind the smear campaign as revenge because Dean blackmailed him into backing off his clients in a prior case, with help from Banks' secretive contact "Brill" (Gene Hackman). Dean sets up a face-to-face meet with Brill and the NSA sends an impostor "Brill" to intercept him, but the real Brill rescues him. Brill explains that his pursuers are NSA agents and rids him of tracking devices hidden in his clothing. With Dean and Brill in hiding, the NSA agents kill Banks and frame Dean for the murder.
Dean obtains the disc and Brill identifies Reynolds in the recovered video, but the disc is destroyed during an escape from an NSA raid. Brill, whose real name is Edward Lyle, tells Dean of his past as a communications expert for the NSA; he was stationed in Iran in 1979 when the Iranian Revolution occurred; his partner, Rachel's father, was killed but Lyle made it out and has been in hiding since. Lyle tries to coax Dean into trying to run away, but Dean is adamant about clearing his name.
Dean and Lyle trail another supporter of the surveillance bill, U.S. Congressman Sam Albert (R-NH), by videotaping him having an affair with his aide. Dean and Lyle "hide" one of the NSA's bugs in Albert's room so Albert will find them and have the NSA start an investigation about Albert's tapping. Lyle also deposits into Reynolds's bank account to make it appear that he is taking bribes, putting enormous pressure on Reynolds.
Lyle contacts Reynolds to set up a meeting to exchange the video and get Reynolds to incriminate himself. Reynolds' men instead ambush the meeting and hold Lyle and Dean at gunpoint, demanding the tape. Dean tells them that the Hammersley murder footage is in the hands of Pintero, knowing Pintero's restaurant is under FBI surveillance. Dean, Reynolds, and the NSA team head into Pintero's restaurant. Using ambiguous language, Dean convinces Pintero that Reynolds is after the incriminating video Dean blackmailed him with and the encounter devolves into a massive firefight that kills the mobsters, Reynolds, and several of his NSA team. Lyle escapes while the FBI rescues Dean and uncovers the entire conspiracy.
The U.S. Congress is forced to abandon the passage plan to avoid a national scandal, though they cover up the NSA's involvement to preserve the agency's reputation. Dean is cleared of all charges and is reunited with his wife. Lyle leaves Dean a "goodbye" message via his TV as he's watching, showing himself relaxing in a tropical location.
Output: Why does Dean think Pintero set him up?