In the year 2154, the RDA corporation is mining Pandora, the lush, Earthlike moon of the planet Polyphemus, in the Alpha Centauri system. Parker Selfridge, (Giovanni Ribisi), the administrator, employs former marines as mercenaries to provide security. The humans aim to exploit Pandora’s reserves of unobtanium, a valuable mineral.
Pandora is inhabited by the Na’vi, a paleolithic species of sapient humanoids with feline characteristics [18]. They are physically stronger and stand several feet taller than humans. They are blue-skinned indigenes who live in harmony with Nature and worship a mother goddess called Eywa.
Humans cannot breathe Pandora’s atmosphere. In order to move about Pandora uninhibited, human scientists have genetically engineered human-na’vi hybrid bodies called Avatars, which are controlled by genetically matched human operators. Jake Sully (Sam Worthington), aparaplegic former marine, arrives on Pandora to replace his murdered twin brother, an Avatar operator. Dr. Grace Augustine (Sigourney Weaver), the head of the Avatar Program, considers him an inadequate replacement for his brother, relegating him to a bodyguard role.
While Jake is escorting Augustine and biologist Norm Spellman (Joel David Moore) in their Avatar forms, the group is attacked by a large predator, and Jake becomes separated and lost. Attempting to survive the night in Pandora’s dangerous jungles, he is rescued by Neytiri (Zoë Saldaña), a female na'vi. Neytiri brings Jake back to Hometree, which is inhabited by Neytiri’s clan, the Omaticaya. Mo'at, (C. C. H. Pounder), the Na'vi shaman and Neytiri's mother, instructs her to teach him their ways.
Colonel Miles Quaritch (Stephen Lang), the mercenary leader of the security forces, learns of Jake’s relationship with the Omaticaya, and offers to have his legs repaired in exchange for providing intelligence about the natives, and learning what it will take to make them abandon Hometree, which rests above a large deposit of unobtanium.
During the next three months, Jake becomes close to Neytiri and the Omaticaya, and begins to prefer the life he lives through the Avatar. Jake's attachment begins to erode his loyalty towards the corporation and the humans and when he is finally initiated into the tribe, he and Neytiri choose each other as mates. Jake's change of loyalty is revealed when he disables a bulldozer as it destroys the Tree of Voices; upon seeing this, Quaritch forcibly disconnects him from his Avatar, and presents Selfridge and Augustine with a vlog in which Jake had admitted that his mission was fruitless; that the humans had nothing the Omaticaya considered to be of value and that they would never abandon Hometree. This convinces Selfridge that negotiations would be fruitless and he orders the destruction of Hometree.
Augustine, whose research suggests that all organisms on Pandora are linked in a vast bio-botanical neural network, protests at the destruction of Hometree, but Selfridge persists, allowing Jake only one hour to convince the Na’vi to leave before Quaritch’s forces arrive. When he reveals the true nature of his mission to the Omaticaya, Neytiri accuses him of betraying them, which results in Jake and Augustine's temporary imprisonment. Jake’s time runs out and Quaritch’s forces destroy Hometree. Eytucan (Wes Studi), Neytiri's father and clan chief, and many others are killed in the attack. Jake and Augustine are once again disconnected from their Avatars and detained for treason against the humans. Trudy Chacon (Michelle Rodriguez), a security force pilot who is disgusted by the violence, breaks them out but Augustine is wounded by the ruthless Quaritch during their escape. With Augustine in a critical state, Jake turns to the Omaticaya for help. Searching for a way to regain their trust, he remembers that Neytiri told him that only five Na'vi had ever tamed the Toruk, an immensely powerful flying beast. Successfully taming it, he flies to the Na’vi, who have gathered at the sacred Tree of Souls. He pleads with Mo'at to heal Augustine, who is now dying. They attempt to transplant her soul into her Avatar but fail.
With the assistance of Neytiri and Tsu'Tey (Laz Alonso), the new leader of the Omaticaya, Jake vows defiance against the humans, and assembles thousands of na'vi from other clans. Jake prays to Eywa to intercede on behalf of the Na'vi in the coming battle. Quaritch, seeing the Na'vi's growing strength, orders a preemptive strike on the Tree of Souls, as it is the center of Na'vi religion and culture; its destruction would leave the na'vi too demoralized to continue resisting the humans.
As the humans move against the sacred site, the Na’vi fight back fiercely, but human technology and firepower outweighs their bravery; they suffer heavy casualties, including Tsu'Tey and Trudy. When all hope seems lost, the Pandoran wildlife suddenly attack the humans in great numbers, overwhelming them in the air and on the ground. Neytiri interprets this as Eywa answering Jake's prayer.
Quaritch orders the bombing of the Tree of Souls but Jake destroys the bomber before it can reach its target. Quaritch escapes in an AMP (Amplified Mobility Platform) suit. He finds the Avatar interface pod, where Jake’s human body is located, and attacks it, damaging it and exposing Jake to Pandora's atmosphere. Neytiri kills Quaritch and saves Jake, seeing his human form for the first time. With the human attack successfully repelled, they reaffirm their love for each other.
The defeated humans are expelled from Pandora, while Jake and his friends remain. Jake is seen wearing the insignia of the Omaticaya clan leader, suggesting that he has become the new leader after the death of Tsu'Tey. The film ends with Jake's soul being successfully transplanted into his Na'vi Avatar.
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