It's Paris 1919, and an elderly, wheelchair-bound man is brought to an auction at the once grand but now dilapidated opera house. The sight of the place brings back memories to Raoul (PATRICK WILSON) when he was the young and dashing patron there in 1870.
During that time, the opera was undergoing big changes with Andre (SIMON CALLOW) and Firmin (CIARAN HINDS) taking over, as the previous owner could no longer put up with demands of lead diva, Carlotta (MINNIE DRIVER). The one constant, however, is the stagehands' belief in The Phantom of the Opera (GERARD BUTLER), a reportedly masked and mysterious figure thought to haunt the place, and whose production-related demands occasionally appear in written form.
His latest concerns Christine Daee (EMMY ROSSUM), a young performer who's been brought to the forefront after Carlotta refuses to perform in a new show, much to the chagrin of ballet mistress Madame Giry (MIRANDA RICHARDSON), whose daughter, Meg (JENNIFER ELLISON), is Christine's best friend. Raoul also knows Christine from the past, and the two soon fall in love, even as still she believes that her late father sent an angel of music to watch over her. In this case, she begins to believe that The Phantom is that angel, but his intentions and behavior are not always heavenly.
When those running the opera don't follow his demands and especially after learning that Christine has fallen for Raoul, the mysterious, masked man sets out to get his way, no matter the costs, including that of others' lives.