The film opens with Hoover (Leonardo DiCaprio) in his office during his later years. He asks that a writer (Ed Westwick) be let in, so that he may tell the story of the origin of the FBI for the sake of the public. Hoover explains that the story begins in 1919, when A. Mitchell Palmer was Attorney General and Hoover's boss at the Justice Department. Palmer suffers an assassination attempt, but is unharmed when the bomb explodes earlier than intended. Hoover recalls that the police handling of the crime scene was primitive, and that it was that night that he recognized the importance of criminal science. Later, Hoover visits his mother (Judi Dench), and tells her that Palmer has put him in charge of a new anti-radical division, and that he has already begun compiling a list of suspected radicals. He leaves to meet Helen Gandy (Naomi Watts), who has just started as a secretary at the Justice Department. Hoover takes Gandy to the Library of Congress, and shows her the card catalog system he devised. He muses about how easy it would be to solve crimes if every citizen were as easily identifiable as the books in the library. When Hoover attempts to kiss her, she recoils. Hoover gets down on his knees and asks her to marry him citing her organization and education, but is once again denied. However, Gandy agrees to become his personal secretary.
Despite his close monitoring of suspected foreign radicals, Hoover finds that the the Department of Labor refuses to deport anyone without clear evidence of a crime; however, Anthony Caminetti the commissioner general of immigration dislikes the prominent anarchist Emma Goldman. Hoover arranges to discredit her marriage and make her eligible for deportation, setting a precedent of deportation for radical conspiracy. After several Justice Department raids of suspected radical groups, many leading to deportation, Palmer loses his job as Attorney General. Under a subsequent Attorney General, Harlan F. Stone, Hoover is made director of the Justice Department's Bureau of Investigation. He is introduced to Clyde Tolson (Armie Hammer), a recently graduated lawyer, and takes his business card. Later, while reviewing job applications with Helen Gandy, Hoover asks if Clyde had applied. Gandy says he had, and Hoover interviews and hires Clyde.
The Bureau pursues a string of gangster and bank robbery crimes across the Midwest, including the high profile John Dillinger, with general sucess. When the Lindbergh kidnapping captures national attention, President Roosevelt asks the Bureau to investigate. Hoover employs several novel techniques, including the monitoring of registration numbers on ransom bills, and expert analysis of the kidnapper's handwriting. The birth of the FBI Crime Lab is seen as a product of Hoover's determination to analyze the homemade wooden ladder left at the crime scene. When the monitored bills begin showing up in New York City, the investigators find a filling station attendant who wrote down the license plate number of the man who gave him the bill. This leads to the arrest, and eventual conviction, of Bruno Hauptmann for the kidnapping and murder of the Lindbergh child.
After going to a Shirley Temple movie with Hoover's mother, Hoover and Clyde decide to go out to a club. When a girl asks Hoover if he ever wishes he had someone to keep him warm at night, he responds that he has dedicated his life to the bureau. Another girl asks Hoover to dance and he becomes agitated, saying that he and Clyde must leave, as they have a lot of work to do in the morning. When he gets home he shares his dislike of dancing with girls with his mother, and she tells him she would rather have a dead son than a "daffodil" for a son. She then insists on teaching him to dance, and they dance in her bedroom. Soon after, Hoover and Clyde go on a vacation to the racetrack. That evening Hoover claims to be considering marriage to a girl he has been seeing in New York City, this provokes outrage from Clyde, and the two fight on the floor, culminating in a kiss. Hoover demands that it must never happen again.
Years later, Hoover feels his strength begin to decline. He requires daily visits by a doctor, and Clyde suffers a stroke which leaves him in a severely weakened state. An attempt by Hoover to blackmail Martin Luther King, Jr. into declining his Nobel Peace Prize proves ineffective, and Martin Luther King, Jr. accepts the prize. When Clyde appeals to Hoover to retire, Hoover refuses, claiming that Richard Nixon is going to destroy the bureau he has created. Clyde then accuses Hoover of exaggerating his involvement in many of the bureau's actions. Upon Hoover's death, Helen Gandy is seen destroying stacks of files, assumed to be Hoover's rumored "personal and confidential" files.