It's 1876 and Captain Nathan Algren (TOM CRUISE) is a disgruntled and alcoholic Civil War hero who's recently battled American Indians in the West. Beset by flashbacks of a brutal massacre of women and children at his hands under the direction of his commanding officer, Colonel Bagley (TONY GOLDWIN), Algren makes a living doing demonstrations for a rifle company.
Yet, his talents are wanted elsewhere. Japanese businessman Omura (MASATO HARADA) has been pressuring the young Emperor (SHICHINOSUKE NAKAMURA) to quell recent samurai uprisings that are preventing the modernization of Japan through his railway system. Accordingly, he's hired Bagley to train the country's new conscript army and the Colonel automatically has thought of Algren since he's seasoned in battling those that others refer to as savages.
Algren initially wants no part of it, but eventually agrees as long as he can bring his friend and fellow Army veteran, Sergeant Zebulon Gant (BILLY CONNOLLY) with him. Upon arriving in the land of the rising sun and meeting their interpreter, Simon Graham (TIMOTHY SPALL), they start training the troops.
Unfortunately, Omura is impatient and sees a prime opportunity to defeat the samurai and their leader, Katsumoto (KEN WATANABE). Algren disagrees but is overruled and thus takes his inexperienced troops into battle against the highly trained warriors.
A massacre ensues and Algren is nearly killed, but his refusal to give up and obvious warrior spirit impresses Katsumoto enough that he spares the American's life. He does take him prisoner, however, removing him far into the hills and to a remote village run by his son, Nobutada (SHIN KOYAMADA).
With nowhere to escape to, Algren isn't confined and instead gets to view how the samurai live, all while staying with Taka (KOYUKI), Katsumoto's sister and a war widow with a unique connection to the American. He's also always trailed by the Silent samurai (SEIZO FUKUMOTO), and constantly having violent run-ins with Katsumoto's right-hand man, Ujio (HIROYUKI SANADA).
As time passes and Katsumoto befriends him and the two men learn about each other, Algren comes to realize that he has more in common with these people than Bagley and the others who are still preparing to attack and defeat the samurai. With another battle being inevitable, Algren must decide what he's going to do.