Roughly eight years after the events of the first film, Paul Kersey has recovered from his shattered life and moved on, now living in L.A. and working as a freelance architect. One of his clients is close friend Elliot Cass, who owns a radio station for whom he is designing a new building, and he is dating one of its reporters, Geri Nichols. They go to pick up Paul's daughter, Carol Kersey Toby, from the mental hospital. They spend the afternoon at a fairground, where Paul's wallet is stolen by a gang led by Charlie "Nirvana" Wilson, including Punkcut, Stomper, Cutter, and Jiver.
The gang splits up when Paul chases them. He pursues Jiver, whom he corners in an alley. When Jiver says that he does not have the wallet, Paul lets him go. The gang finds Paul's home address in his wallet and breaks into his house. They restrain Rosario, Paul's housekeeper, and begin taking turns raping and sodomizing her. When Paul arrives home with Carol, he is beaten unconscious. Rosario tries to call the police, but Nirvana kills her with his crowbar. They kidnap Carol and take her to their hideout, where Punkcut rapes her, but before Jiver can satisfy his urges afterward, Carol attempts to escape by running through a plate-glass window, falls onto an iron fence, and dies. Paul later refuses to help the police identify the muggers.
After Carol's funeral, Paul takes his handgun to a low-rent inner-city hotel as a base of operations. The next evening, he sees Stomper and follows him into an abandoned building as a drug deal is about to be made. Paul fatally shoots one dealer and orders the others out before killing Stomper. The following night, he hears screams from a couple being assaulted in a parking garage by four muggers, which includes Jiver. Paul kills two rapists and wounds Jiver. Paul then follows Jiver's blood trail into an abandoned warehouse and kills him.
After the victims of the parking garage assault refuse to identify Paul, the LAPD suspects that the murders are the work of a vigilante and asks the NYPD for guidance. NYPD Detective Frank Ochoa suspects it may be Paul again and is sent to assist with the case. Ochoa understands that Paul, when caught, will reveal that he was released without being charged for killing the 10 muggers in NYC. Ochoa enters Geri's apartment and tells her about Paul's previous vigilante killing spree in NYC. After Paul returns home, Geri confronts him, but he denies everything.
Ochoa follows Paul, who is tailing the three remaining gang members. He follows them to an abandoned park, where an arms and drug deal is underway. A sniper scouts Paul and attempts to kill him. Ochoa warns Paul and fatally shoots the sniper. Ochoa is mortally wounded by Nirvana, and Paul wounds Punkcut and kills Cutter and another dealer. The arms dealer tries to get away, but Paul shoots and causes his car to drive off a cliff and explode. Nirvana escapes. Ochoa tells Paul to avenge him and dies. Paul escapes, and Punkcut dies from his injuries after giving information about Nirvana to the police.
Paul learns from one of Geri's colleagues, Fred McKenzie, that the police are preparing a tactical unit to capture Nirvana. He obtains a police scanner and, by monitoring police radio traffic, learns when and where the arrest will take place. He drives to the location to kill Nirvana, who, under the influence of PCP, slashes his arm and stabs officers while trying to escape. Tried and found criminally insane, he is sent to a mental institution.
Geri is writing a story about the case and capital punishment, and takes Paul to the hospital to meet Dr. Clark, who is treating Nirvana. While there, Paul steals another doctor's ID card and uses it to forge a fake ID to enter the asylum and confront Nirvana. After repeatedly stabbing Paul with a shiv, Nirvana ends up plunging his arm into a high-voltage panel. Paul turns it on, fatally electrocuting him.
Donald Kay, an orderly, recognizes Paul from the newspaper coverage of Carol's murder, and gives him three minutes to escape before he rings the alarm. Geri goes to Paul's house and finds out that he made a fake doctor's ID. Upon hearing a news report of Nirvana's death on the radio, she realizes that Paul really is the vigilante that Ochoa claimed him to be. She takes off her engagement ring and leaves Paul, who arrives home moments later.
Months later, Paul attends a presentation of his building design for the radio station. Cass invites him to a launch party, but questions why Paul always seems unavailable in the evenings and never takes phone calls. When Paul accepts the invitation, he answers, "What else would I be doing?" Paul returns to the streets at night and continues his killing spree.
Paul Kersey tracks down and confronts the gang members responsible for his family's suffering, dealing out his form of vigilante justice and avenging their deaths.
The ending reaffirms Kersey's transformation from victim to relentless avenger, delivering personal retribution outside the law. This conclusion underscores the film’s ongoing debate over vigilantism, suggesting that Paul’s cycle of violence is as much a reflection of his trauma as it is a critique of ineffective legal systems.