It's the year 2154 and humans have exhausted and/or destroyed the resources on Earth. Accordingly, they've sent a corporate team headed by Parker Selfridge (GIOVANNI RIBISI) to the planet of Pandora to mine a valuable and powerful mineral known as Unobtainium. The indigenous, tribal type beings that live there, the blue-skinned and Amazonian type Na'vi, however, are none too happy about the "sky people" interlopers who are now infringing on their world.
While a team of military contractors lead by Col. Miles Quaritch (STEPHEN LANG) is raring to go guns blazing, Parker is allowing the diplomatic approach its chance to avoid bloodshed and thus bad PR back home. That effort is fronted by Dr. Grace Augustine (SIGOURNEY WEAVER) who's created a high-tech program where puppet Na'vi -- created by mixing the DNA of that race with the human variety -- serve as flesh and blood avatars controlled from a remote location by human operators.
Among them is former Marine Jake Sully (SAM WORTHINGTON) who lost function of his legs while in the Corps but can't afford to get them fixed. Grace isn't happy to see him since he's replacing his recently murdered brother who trained for years for this task, but since he shares the same genome with his sibling, Jake is given the green light and joins her and Norm Spellman (JOEL DAVID MOORE) in infiltrating the locals.
But Jake, still getting used to his new remote body, ends up separated from them and chopper pilot Trudy Chacon (MICHELLE RODRIGUEZ), and must contend with the dangerous and exotic wildlife that comes out at night. He ends up saved by warrior princess Neytiri (ZOE SALDANA), who nearly killed him earlier but got a sign from nature not to, and is then captured by lead warrior Tsu'tey (LAZ ALONSO) and taken back to the tribe and its leader (and Neytiri's father), Eytukan (WES STUDI). With his wife similarly sensing some potential greatness in Jake, Eytukan orders his daughter to train the outsider in their ways, unaware that Jake, while his avatar is sleeping, is back at headquarters feeding intel to Quaritch about how to plan their attack.
But the more time he spends with Neytiri and her people, the more Jake starts to see and then adopt their lifestyle, mindset, and connection with their natural world. As that puts him in direct conflict with Quaritch, Jake must then do what he can to protect his new friends from the military onslaught that's about to ravage them and their land.