After her recent divorce from husband Stephan (PATRICK BAUCHAU), Meg Altman (JODIE FOSTER) and her teenage daughter Sarah (KRISTEN STEWART) are looking for a new place to live. They think they find it in a unique and rather immense brownstone in Manhattan's Upper West Side. Among its many features is a secret "panic room," a secure shelter just off the master bedroom complete with it impenetrable walls, a separate ventilation system and phone line from the main house, and a bank of surveillance monitors showing most of the home's interior.
The room makes Meg feel claustrophobic, but she figures she'll never use it. On their first night in their new home, however, a trio of burglars has arrived there, unaware that anyone has moved in yet. Once in, however, Burnham (FOREST WHITAKER), Junior (JARED LETO) and the newest addition to their team, Raoul (DWIGHT YOAKUM), decide they can't turn back.
When Meg finally realizes there are intruders in her home, she manages to grab Sarah from a floor down and seal themselves inside the panic room just in time. Once inside, they can see the criminals' whereabouts, but Meg then realizes that she forgot to activate that room's phone line and her cell phone is still in the bedroom.
Using the whole house intercom system, Meg tries to bluff the criminals into leaving, but Burnham, who makes a living installing such secure rooms, knows she couldn't have contacted the police. The criminals then let Meg know that what they want is in fact inside the very room where she and Sarah are hiding.
As the criminals then secure the rest of the house so that Meg and Sarah couldn't escape or call for help even if they left the room, they try to figure out how to lure or force the two from there, all while Meg tries to figure out how to thwart their efforts, get them to leave and protect herself and Sarah.