Jake Sully (Sam Worthington) is a Marine who was paralyzed in battle. His twin brother, Tommy, had been training for three years to control an Avatar on Pandora, a planet that humans have invaded in hopes of getting Unobtainium, a precious metal. Jake is recruited when his brother dies to take over his Avatar, a hybrid of the DNA of a human and a Na'vi, one of Pandora's indigenous people. He is transported to Pandora via a cryo-chamber, and disembarks using an oxygen mask since humans cannot breathe the air on Pandora.
When Jake arrives at Pandora, he meets Dr. Grace Augustine (Sigourney Weaver) and a fellow Avatar driver named Norm Spellman (Joel Moore). Grace is pissed that Jake is there, saying that she needs Tommy, who had trained for this. However, she puts Jake in his "link," which puts his brain in control of the Avatar. Once he awakens in his Avatar body, he immediately disobeys the orders of the doctors, who want him to ease into things. He runs out of the facility, joyful that he has the use of his legs.
Grace meets with Parker Selfridge (Giovanni Ribisi), who seems to be the mastermind behind the invasion. The military leader is Colonel Quaritch (Stephen Lang). Grace is upset that Parker keeps trying to nose his way into the Avatar program, which is her department.
Jake, Norm, and Grace take their Avatars over the wall of the facility in a helicopter flown by Trudy Chacon (Michelle Rodriguez). She drops them off for their canvassing mission, and Jake wanders away from the group. Here, he runs into a dinosaur-like creature who nearly attacks him. Grace tells him not to shoot it, as the creature's skin is too thick for bullets. However, a different creature (I forget the names of these, it looks like a panther) arrives and starts to attack Jake. Grace screams at Jake to run, which he does. He only escapes by jumping off a cliff into a huge waterfall. However, now he is separated from the group.
Grace, Norm, and Trudy fly over until nightfall trying to find him, but have to follow orders not to be out at night. Grace fears Jake will not survive the night alone on Pandora.
Jake is wandering around the forest at night, where a ton of different creatures are wandering around. We see Neytiri (Zoe Saldana), a Na'vi, perched on a branch above him. She is about to shoot him with an arrow when a little sea-anemone looking thing lands on her arrow. This seems to be a sign to her, and she does not shoot.
Later, Jake finds himself in the middle of a pack of the panther-like creatures that attacked him before. Eventually he tries to fight them off, and is about to lose when Neytiri runs over and starts killing the creatures with her bow and arrow. Jake thanks her profusely, but she is very upset about having to take the life of these innocent creatures. Jake follows her through the forest, asking her to teach him how to defend himself. She is going to refuse, but suddenly those anemone creatures are all around them again. Thousands of them perch on Jake's body, and Neytiri looks stunned. She takes him to a clearing, where a bunch of Na'vi ride up on Pandora's version of horses. They want to kill Jake, since they know he is one of the "sky people," a human in an Avatar's body. However, Neytiri says he was chosen by Eywa, their deity. They agree to bring him back to their Home Tree, where the final decision will be made by the leaders.
At Home Tree, Jake meets Neytiri's parents, Moat and Eytukan, who are the leaders of this clan of Na'vi. They are angry at Neytiri for bringing Jake, who repeats that there was a sign from Eywa. Jake says all he wants to do is learn, and they agree to let him stay on the condition that Neytiri teaches him everything. She complains about this responsibility but her parents' word is final. They all go to sleep, and Jake wakes up in his human form, back at the base. Grace and Norm are relieved that his Avatar is safe, and grill him for details. They are impressed that he survived the attack of the creatures and has somehow gotten in with the Na'vi. They want him to use this position to try to find a diplomatic solution. However, Colonel Quaritch also meets with Jake and tells him to use this position to find out their weaknesses, so the military can now how they can best beat the Na'vi. He says that if Jake does this, he will see to it that Jake gets an expensive surgery to regain use of his legs.
There is a montage of Neytiri teaching Jake different things, including the language of the Na'vi and how to ride the horses. The braids that the Na'vi wear intertwine with the reins of the horses, so they are linked through their minds. Jake keeps falling off his horse, and Neytiri makes him try again and again. Jake is getting more involved with the clan, and convinces them to let Grace's Avatar visit, which she does. Neytiri is also trying to teach him how to make a clean kill. Once he finally does, while saying a prayer over the corpse, she says he is ready. She takes him to the lair of her Banshee, a pterodactyl-like bird that she can also ride using the connection of her braid to his. Neytiri says that unlike the horses, each Na'vi rides only one Banshee for life, and Jake has to find his.
The two of them, along with some other Na'vi, climb up a huge structure in the sky to get to where the Banshees live. Neytiri tells Jake that he will know what Banshee is meant for him, since all the others will fly away in fear, but his will try to kill him. Jake finds a Banshee that stands up to him, and tackles the Banshee to try and make the first connection. Jake is nearly killed but finally makes the connection and takes his first ride. He says in voiceover that horses are not for him, but he was made to fly. Neytiri joins him on her own Banshee, and they exchange many loving looks.
Suddenly, they are attacked by the Leonopteryx, a huge dragon-like creature that is easily five times as big as a Banshee. They fly down to the ground and somehow shake off the Leonopteryx.
Every time that Jake's Avatar goes to sleep, he wakes up in his human form. When he is human, he makes video logs talking about what he has done on Pandora. One set of logs he keeps for Grace, and another he sends to Colonel Quaritch. He doesn't send one to Quaritch for a while, so the Colonel is getting suspicious that Jake's head isn't in the game. Jake says he just needs more time before they attack; he wants to find some sort of a diplomatic solution.
Back on Pandora, Neytiri takes Jake to a sacred area, where the Na'vi can make connections to Eywa, and can hear the memories of their ancestors. Neytiri says that by bringing Jake there, she has solidified his position in the clan and he will officially be made one of them. She says he can choose a woman, and makes suggestions as to who he might pick. He says he's already made his decision, but this woman has to choose him in return. Neytiri says she has, and they make love. Neytiri says that doing so in the presence of Eywa has mated them for life. They go to sleep.
Neytiri wakes up the next morning to the sound of a bulldozer coming through the trees. The humans have come in to take down the trees of Eywa. Neytiri is screaming with anguish and trying to get them to stop. Jake is still asleep, and is not in his link back at the base. Grace forces him to eat before linking again. He finally links at just the right time, before they are run over by the bulldozer. He waves his arms frantically to try to get the bulldozer to stop, which it does for a split second before starting again. Colonel Quaritch is controlling the bulldozer. Jake jumps on the machine and breaks the cameras so they cannot control it anymore. Colonel Quaritch looks at the video and realizes that this is Jake; he realizes Jake has switched sides.
Back at Home Tree, everyone is distraught that Eywa's valley has been destroyed by the humans. Grace is there as well, in Avatar form. The Na'vi are angry with them for bringing the sky people there, although they say they had nothing to do with it. Suddenly, Teu'tey, a Na'vi that has never really warmed to Jake, realizes that Neytiri and Jake have mated. Grace is stunned. Back at the base, Colonel Quaritch storms into the link area and breaks Grace's and Jake's links. Grace yells at Parker, saying they need more time; Quaritch and Parker want to attack Home Tree, which sits on top of Pandora's biggest Unobtainium deposit. They agree to let Jake and Grace link up again to try and get the Na'vi out of Home Tree.
Jake and Grace go to Home Tree to try and convince them to leave, since they know Colonel Quaritch and Parker will not wait to attack. Jake admits he knew from the beginning they were planning this, and Neytiri starts to sob, saying she trusted him. He tries to tell her that everything changed, he fell in love with her and Pandora, but she screams at him to leave. Grace and Jake are tied up as the military starts to arrive. The aircraft start to attack with bombs; the Na'vi retaliate with arrows that have no effect. Moat, Neytiri's mother, unties Grace and Jake, saying if they are truly Na'vi, they need to help them. Trudy is in one of the helicopters, but leaves, saying she didn't sign up for this. Eventually, the bombs cause Home Tree to crack and collapse. Neytiri's father is killed in the battle and the military retreats. Once again, Quaritch breaks Grace and Jake's links. They are screaming that he is a murderer, and they along with Norm are placed in a prison cell.
Trudy brings the prisoners food, but pulls a gun on the guard and frees the three of them with the help of Max, a doctor in the Avatar program. As they are leaving, Jake tells Max to stay behind, as he needs someone he can trust on the inside. Trudy starts up her helicopter and is detected by Quaritch, who bursts out into the hanger and starts shooting. The four of them barely get off the ground; they are going to the Floating Mountains, where they have another link station and they cannot be tracked as they are too high up in the atmosphere. As they fly, Jake realizes that Grace has been shot and is bleeding profusely.
Once they arrive at the link station, Jake decides that he has to regain the trust of the Na'vi. He takes his Banshee and decides to try and make a connection with the Leonopteryx, who would not be expecting this. He succeeds in training the creature, and flies it to the Tree of Souls, where the Na'vi have relocated. Once they realize he has trained the beast, they are in awe of him. Neytiri says she was afraid for her people, but isn't anymore. She says "I see you," which is the highest statement of love between the Na'vi; it means they see into one another's souls. Jake returns the sentiment, but quickly says that he needs help, as Grace is dying.
Grace and her Avatar are both brought to the Na'vi, where Moat performs a ritual that would put Grace's consciousness permanently into her Avatar so she would not need to be linked, and she would survive this way. Despite all their pleas to Eywa, her injuries were too great and she dies. Jake then gives a speech that he knows the sky people are planning to attack again, and they must stand up and fight. They have to enlist all the other clans on Pandora, which they then do. Back at the base, Quaritch sees via radar that their numbers are slowly growing to over two thousand Na'vi. Max sends a video message to Jake, Grace, and Trudy that they are planning to mobilize and attack the Tree of Souls.
Jake is alone at the Tree of Souls, where he makes a plea to Eywa to help his people, the Na'vi. Neytiri comes up behind him and says despite his efforts, Eywa does not take sides; she only protects the balance of life. They embrace.
The final battle begins with ground troops coming in. They notice that something is getting closer and closer on the radar; it is the Na'vi, on their horses. In the air, the military's planes are planning to attack when they are attacked by Na'vi on Banshees - Jake and Neytiri are among these soldiers, while Norm is on the ground. The Na'vi on the ground are being decimated, as they are going up against guns with bows and arrows. Those in the air are causing some damage, but not enough. Trudy is attacking Quaritch's plane with her own helicopter but is hit and her helicopter explodes, killing her. Norm is also shot on the ground, and awakens in his link station, gasping for air. Neytiri is attacked by a plane and falls to the forest floor, but survives. Jake is trying to coordinate with his friends but gets no reply.
Neytiri is on the ground, hiding, but surrounded by humans. Jake screams at her not to attack, as she will certainly be killed. She does not listen, and prepares her bow to fight to the death, but suddenly the humans stop. They have detected something else approaching on radar. Suddenly, all the creatures from the beginning (the dinosaur and panther-looking creatures) charge the humans, who start being killed in droves. Neytiri screams with joy that Eywa listened to Jake.
Jake attacks Quaritch's plane, but Quaritch somehow escapes by getting into a huge robot-like shell that humans can control in battle. He falls to the forest floor and starts fighting with Jake man-on-man. They are right next to the link station where Jake is still linked to his Avatar. Quaritch hits the link station, which causes a small hole to form in Jake's bed. Since humans cannot breathe Pandora's air, his human body, still linked to his Avatar, starts choking. Jake, in his Avatar form, is still fighting but is pinned by Quaritch, who is about to kill him when Neytiri appears and shoots two arrows right through Quaritch's chest.
Once he is dead, she runs over to Jake, who has fallen unconscious due to the trauma his human form is going through. Back in his human form, he stumbles out of his link station but cannot reach the emergency oxygen mask due to his paralysis. He falls to the floor and stops breathing. Neytiri tries to awaken his Avatar form but can't. She then runs into the link station and puts the oxygen mask on Jake's human form. He wakes up and is able to breathe again. She cradles him in her arms and they both say "I see you."
Jake, in his human form, gives his last video log. He says the humans were sent back to Earth, and only a few (Norm and Max) were allowed to remain behind. He says that he can't be late to his own party, and signs off. At the Tree of Souls, Moat and Neytiri are performing the same ritual they tried to perform with Grace. Jake's consciousness is permanently put in his Avatar form, and he opens his eyes.
*CUT TO THE CHASE*
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Grace dies from her wounds. Jake manages to unite all the Na'vi tribes against the humans, and stops their plan to extract the Unobtainium. In the process, Neytiri kills Colonel Quaritch.
All the humans, except for those who sided with the Na'vi, are forced to return to Earth.
The great tree deity grants Jake his wish and transfers his spirit to the Na'vi avatar so that he can be with Neytiri forever.
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