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Optimus Prime, leader of the benevolent Autobots, narrates the collapse of the Transformers' home world, Cybertron. It was destroyed by war between the Autobots and the malevolent Decepticons, lead by Megatron in his quest to get hold of the All Spark. The Autobots want to find the All Spark so they can use it to rebuild Cybertron and end the war, while the Decepticons want to use it to defeat the Autobots and take over the universe. Megatron had managed to locate the All Spark on Earth, but crash-landed in the Arctic Circle and froze in the ice. After stumbling upon his frozen body in 1897, explorer Captain Archibald Witwicky accidentally activated Megatron's navigational system and his eye glasses were imprinted with the coordinates of the All Spark's location, an incident that left him blind and mentally unstable. Sector 7, a secret government organization created by President Herbert Hoover, discovered the All Spark in the Colorado River and built the Hoover Dam around it to mask its energy emissions. The still-frozen Megatron was moved into this facility and was used to advance human technology through reverse engineering.

In the present day, the Decepticon known as Blackout arrives in a U.S. military base in Qatar to find the location of Megatron and the AllSpark. He tries to hack into the files of the computer base, but is stopped by Captain William Lennox and his team. Back in the United States, Captain Witwicky's descendant Sam Witwicky buys his first car which turns out to be the Autobot scout Bumblebee and helps him woo his crush Mikaela Banes. Later, Sam catches a glimpse of Bumblebee's true form when he signals the other AutobotsSoon, it is up to Sam to decide Earth's fate. Optimus urges Sam to put the AllSpark in his chest, which will destroy them both, but Sam instead inserts the cube into Megatron's chest, which kills him and destroys the AllSpark. All of the dead Transformer bodies are dumped into the Mariana Trench at Atlantic Ocean to be hidden, Sector 7 gets closed down by the President of the United States, and the Witwicky family are released from custody.