A steamboat traveling from Manila to the province of La Laguna carries passengers from all walks of Filipino life. Prominent priests, journalists, and socialites converse above deck, together with the captain-general’s shadowy advisor Simoun. The boat also carries two prominent Filipino students, Basilio and Isagani, who are petitioning the authorities to establish an independent Spanish-language academy. The threat of revolution hangs over both conversations, especially as the boat passes the site where the infamous Ibarra was killed.
In La Laguna, the local priests extort the farmer Cabesang Tales for rent on his land, which they claim to own. Tales becomes obsessed with defending his land, but the authorities side with the priests. Disarmed, Tales is kidnapped and held for ransom, forcing his daughter Julí, Basilio’s fiancé, to sell herself into servitude to free him.
Basilio finds La Laguna a more dour place than he remembers. After his mother’s death, he traveled to Manila alone, found a job serving Captain Tiago, and enrolled in school. Visiting the site of his mother’s grave, he is surprised to find Simoun, and he realizes they have met before: Simoun is none other than Ibarra, returned in disguise and using his power to inflame social tension to accelerate an anticolonial uprising. Basilio refuses to join him, but Simoun is confident that Basilio won’t reveal his secret and chooses to let him live.
Simoun visits the freed but destitute Cabesang Tales and asks to stay as a guest while Tales sells jewels in La Laguna. The local elite rush to buy from him, but Tales refuses to sell Simoun a locket that Basilio gave to Julí, which once belonged to Ibarra’s fiancé María Clara. Tales then steals Simoun’s gun, kills the priest who wronged him and the new owner of his expropriated land, and joins the bandits operating in the forest. At the captain-general’s nearby vacation residence a brief business meeting takes place. The captain-general discharges his duties on a whim, refusing to answer the hotly debated question of the Spanish language academy.
Medical student Plácido Penitente loses faith in his education. His dissatisfaction builds to a crisis when he is cruelly humiliated by his teacher, Father Millón, causing Plácido to storm out. Meanwhile the other students, led by Isagani and his friends, as well as the opportunist Juanito Peláez, learn that the captain-general has delegated the decision on the Spanish-language academy to Don Custodio, a would-be reformer. Isagani petitions Custodio’s lawyer, Señor Pasta, but Pasta refuses to stick his neck out for a politically risky proposition.
At a party he hosts, the Chinese merchant Quiroga approaches Simoun for help with his debts. Simoun agrees on the condition that Quiroga stockpile weapons for his mysterious plot. An argument between the journalist Ben Zayb and the priest Father Camorra about an exhibition featuring a talking head at the Kiapo Fair prompts the group to investigate the alleged magic for themselves. Ben Zayb’s confidence that he can expose the trick is frustrated by Mister Leeds, the exhibit’s American owner. The talking head terrifies the priest Father Salví, its allegorical story about ancient striking a nerve.
Plácido’s mother unsuccessfully attempts to dissuade him from quitting school. He approaches Simoun and asks for help traveling to Hong Kong, but instead Simoun drags Plácido into his scheme, which will be set into motion imminently. Meanwhile, Don Custodio struggles to decide on the academy, navigating between his liberal tendencies and his reluctance to offend the powers-that-be.
A French operetta opens in Manila, captivating and scandalizing all of high society. At the performance, Isagani is hurt to see his fiancée Paulita Gómez sitting with Juanito. This is overshadowed, however, by bad news: Don Custodio has allowed them to create a Spanish-language academy, but it won’t be independent—worse, it will be operated by the priests. The hurt and angry students decide to host a celebration anyway as an opportunity to mock the priests and the government.
During the operetta, Simoun visits Basilio, who stayed home to treat Captain Tiago’s opium addiction. This offered Basilio another chance to join the revolution, with the special task of rescuing María Clara from her convent. Basilio tells Simoun the devastating news that she died that very day.
The day after the students’ banquet, the schools are closed due to the discovery of subversive broadsides posted on the gates. The student leaders are quickly arrested, despite not being responsible. Isagani, before being arrested, has a heated political debate with Father Fernández, an uncommonly sympathetic priest. Even Fernández, however, resorts to the same self-justifying colonial logic when by Isagani’s arguments back him into a corner, acknowledging that for the priest to take the side of justice would be against their own self-interest.
All of Manila is on edge after the arrests, but sporadic violence fails to escalate into open revolution, as the grieving Simoun refuses to speak to both the authorities and his fellow conspirators. Captain Tiago dies, leaving Basilio unprotected, and so he remains in prison long after the other students despite being the least involved in their movement. When Julí attempts to petition the lecherous Father Camorra on his behalf, the priest sexually assaults her, and she dies attempting to escape. The captain-general’s chief of staff resigns in protest at the obvious miscarriage of justice against Basilio.
The student movement is crushed, and only Isagani remains in university. Paulita breaks off their engagement and prepares to marry Juanito instead, whose father Timoteo uses his connections to Simoun and the captain-general to enrich himself. Basilio, finally freed, at last visits Simoun to join his revolution. Simoun reveals his next plan: to bomb Juanito’s wedding with a booby-trapped lamp, killing nearly all of Manila’s elite, before Cabesang Tales’s bandits seize the city. Basilio wavers, and when he sees Isagani walking toward the wedding—as an observer, not a guest—warns him to get away. Instead Isagani intervenes, breaking in and throwing the lamp into the river before the fuse can ignite, but he is able to escape unrecognized. Rumors quickly spread as other elements of the plot are discovered. Isagani reflects on his actions and wonders if he did the right thing. He resolves to leave Manila for his village.
Simoun, now discovered and wounded, also flees to the village with his jewels, asking Isagani’s uncle Father Florentino for shelter. Simoun intentionally overdoses on medicine before telling Florentino his story. They debate whether his actions were right or wrong, and Florentino urges Simoun to keep his faith in justice. Florentino prays for Simoun, and then takes the jewels and throws them into the ocean.