The society of Atlas Shrugged is one of worsening economic conditions, and Dagny Taggart, who is vice president of operations, is working to repair Taggart Transcontinental's Rio Norte Line to service Colorado. This is the last booming industrial area in the country. Her efforts are hampered because many of the country's most talented entrepreneurs are retiring and disappearing. The crisis worsens when the Mexican government nationalizes Taggart's San Sebastian Line, which had been built for Francisco d'Anconia's copper mills, which turned out to be worthless. Francisco, who had been Dagny's lover, was once a successful industrialist but is now a worthless playboy. In an attempt to solve the railroad's financial problems, Dagny's brother Jim uses his political influence to pass legislation that leads to the destruction of Taggart's only competition in Colorado. The Rio Norte Line has to be fixed immediately, and Dagny plans to use a new alloy created by Hank Rearden of Rearden Metal. When Francisco is confronted about the San Sebastian mines, he tells Dagny he is deliberately destroying d'Anconia Cooper. Later he is at Rearden's anniversary party, and urges Rearden to reject the freeloaders who live off him.

The State Science Institute denounces Rearden metal, and Taggart's stock crashes. Dagny creates her own company to rebuild the line, which is a huge success. Dagny and Rearden become lovers. Together, they discover a motor in an abandoned factory that runs on static electricity. They try to find its inventor. New legislation is passed that destroys industry in Colorado. Ellis Wyatt, an oil tycoon, suddenly disappears after setting fire to his oil wells. Dagny has no choice but to cut trains, which causes the situation to worsen. More industrialists disappear. Dagny believes someone is sabotaging things by taking men away when they are needed the most. Francisco visits Rearden and asks him why he is staying in business with the conditions as repressive as they are. When a fire breaks out and they work to put it out, Francisco understands Rearden's love for his mills.

Rearden goes on trial for breaking one of the new laws. He refuses to participate in the proceedings. He tells the judges they can coerce him by force, but that it will not help them convict him. They do not want to be seen as thugs, so they let him go. Wesley Mouch needs Rearden's cooperation for a new set of socialist laws, and Jim needs economic favors that will keep his railroad running after the collapse in Colorado. Jim appeals to Lillian Rearden, who wants to destroy her husband. She tells him that Rearden and Dagny are having an affair, and he uses this information in a trade. The new set of laws, called Directive 10-289, is irrational and repressive. Included in the directive is a ruling that requires all patents be signed over to the government. Rearden is blackmailed into signing over his metal in order to protect Dagny's reputation.

The new directive causes Dagny to quit, and she retreats to a mountain lodge. She hears about a massive accident at the Taggart Tunnel, and returns to her job. The scientist she hired to help rebuild the motor sends her a letter indicating he fears he will be the next target of the destroyer. To stop him from disappearing, she follows him in an airplane and crashes in the mountains. She wakes up in a valley among all the retired industrialists. They are on a strike, which they call a strike of the mind. She meets John Galt, who turns out to be both the destroyer and the inventor of the motor. She falls in love with him, but is unable to give up her railroad, so she leaves the valley. When she returns to work, she finds that the government has nationalized the railroad industry. Government leaders want her to give a speech that reassures the public about the new laws. She refuses until she is blackmailed by Lillian. On the air, she announces her affair with Rearden and reveals the blackmail. She warns the people about the repressive government.

The economy is on the verge of collapse. Francisco destroys the rest of his holdings and disappears. By this point, the politicians are not even pretending to work for the public good anymore. They peddle influence which creates more chaos. Crops rot while they wait for freight trains that are diverted for personal favors. In an attempt to get control of Francisco's mills, the government states a riot at Rearden Steel. Led by Francisco, who has been working undercover at the mills, the steelworkers organize and fight back. Francisco saves Rearden's life and convinces him to join the strike.

The head of state prepares to give a speech about the economic situation, and John Galt takes over the airwaves. He gives a lengthy speech to the country, giving the terms of the strike. The government is desperate, and seeks to make Galt their economic dictator. Dagny inadvertently leads them to him, and they take him prisoner. Galt refuses to help them, even under torture. Finally, Dagny and the strikers rescue him in an armed confrontation with guards. They return to the valley, and Dagny joins the strike. Soon, the country's collapse is complete, and the strikers prepare to return.