On August 28, 1939, a woman dies giving birth to a male child in a meat-packing plant in Travis County, Texas. The plant manager disposes of the baby's body in a dumpster near the packing plant and leaves the scene. A young woman, Luda Mae Hewitt, discovers the baby in the dumpster while searching for food for her family. She names the infant Thomas and takes him to the Hewitt residence, raising him as her own son.

In July 1969, 30 years later, Thomas, now known as 'Leatherface', has grown up and goes to work in the same slaughterhouse in which his mother died, working for the same boss that put him in the dumpster. The plant is closed by the health inspector due to its horrid conditions. When one of the boss' assistants insults Leatherface calling him an "animal", he leaves. Later that day Leatherface returns and brutally mauls and kills his boss with a sledgehammer. While leaving he finds and takes a chainsaw. Charlie Hewitt (R. Lee Ermey), Luda Mae's son, learns from Sheriff Hoyt (Lew Temple) what Leatherface has done, and accompanies the Sheriff to arrest Leatherface. When they find Leatherface, Charlie kills the Sheriff with a shotgun and takes his outfit, weapons, and identity. Charlie and Leatherface take the Sheriff's body home and butcher him for stew meat, telling the rest of the family that they will not leave and with "good people like the sheriff here" they'll never go hungry again. The family then feasts on Sheriff Hoyt's remains.

Meanwhile, two brothers, Eric (Matthew Bomer) and Dean (Taylor Handley), drive across the country with their girlfriends Chrissie (Jordana Brewster) and Bailey (Diora Baird). They are traveling to enlist to go to Vietnam, Eric having already been, and Dean with a draft card. They stop at a local eatery where they encounter a group of bikers. As the group pulls away, a female biker, Alex, follows them. Dean decides he's not going to Vietnam and starts to burn his draft card in front of Eric, Chrissie and Bailey. Alex pulls a shotgun out to get the group to pull over. A chase ensues, ending with the group crashing and flipping their car when Eric turns around attempting to shoot at the biker. In the process, Chrissie gets thrown from the jeep and lands in the weeds, out of sight of the others. Charlie Hewitt/Sheriff Hoyt soon arrives on the scene; he immediately shoots Alex, finds the partially burnt draft card and demands to know which one of the guys is a draft dodger. To save Dean, Eric claims it's his. Hoyt makes them put Alex's body into his car, forces the rest of the group in as well (except Chrissie, since she's hiding in the weeds), and calls for Uncle Monty to tow the wreckage. The truck comes and tows the car, in which Chrissie has hidden herself.

Hoyt takes the group to the Hewitt house and calls for Leatherface. He then takes Eric and Dean to a barn and hangs them by their arms from the rafters; he later ties Bailey to the kitchen table inside the house. From afar, Chrissie sees her friends tied up and runs back to the highway to get help. She flags down Holden, one of the bikers from the diner, and tells him about Alex and her friends. Holden takes out a revolver and follows Chrissie back to the Hewitt house.

At the Hewitts', Hoyt wraps Eric's face with cellophane, slowly suffocating him for trying to dodge the draft. Dean begs him to stop and finally admits the draft card was his. Hoyt shoves a knife into Eric's open, cling-film covered mouth, making him cough up blood and allowing him to breathe. He then releases Dean and tells him he can walk away free if he can do 10 push ups. As he does them Hoyt brutally beats him with his nightstick. Dean eventually does 10 push ups and Hoyt beats him more, then says he's free to go, although Dean seems to be temporarily paralyzed. When Hoyt leaves, Eric breaks free from his restraints and gets Dean to safety while he sneaks back in the house and frees Bailey. As they escape, Hoyt comes outside with his shotgun and Eric stands in his way while Dean runs, when Dean stands in a bear trap Hoyt takes advantage of the distraction and knocks out Eric. Bailey almost escapes, taking Monty's truck and driving down the road, but Leatherface hooks her in the chest with a meat hook and drags her from the truck and back into the house. Eric is thrown on the kitchen table. Leatherface then carries Eric into the basement where he sees Alex's body hanging from the ceiling, parts of her limbs missing. Leatherface punches him, incapacitating Eric, and nails metal straps to a wooden table across his wrists and ankles. Leatherface then picks up a knife and cuts open Eric's shirt. While Eric begs for his life, Leatherface inspects the shape and form of Eric's face.

Holden and Chrissie arrive at the house to search for Alex, and Holden ends up shooting Uncle Monty in one of his kneecaps, before taking Hoyt hostage. Hoyt leads him to a bedroom and calls for Leatherface to help him. Eric now has a strap across his neck as well, and Leatherface starts to cut the skin and flesh from his forearm. Chrissie hears Eric screaming and finds the door to the basement, Leatherface opens the door and walks past Chrissie carrying his chainsaw, without noticing her. Hoyt shows Holden to Bailey, who is tied to a bed with covers around her and incorrectly thinking this must be the girl he's looking for. Holden points his gun at Hoyt to kill him, Leatherface stops him and kills him with his chainsaw while Bailey is screaming which distracts Chrissie and Luda Mae. Chrissie finds Eric and tries to free him, but cannot release the metal straps nailed to the table. He says he cannot feel his arm and we see that Leatherface has removed all his nerves. Chrissie hides under the table when Leatherface comes downstairs with his chainsaw in hand. Leatherface inspects Eric's face again then starts up his chainsaw and plunging it into Eric, killing him and cutting right through the table. He then skins Eric's face, putting it on as a mask. Hoyt calls Leatherface upstairs. Hoyt tells Leatherface he likes his new face and to chainsaw off Uncle Monty's legs due to the bullet being unable to be removed.

Later Chrissie finds and tries to free Bailey, whom Hoyt has tied up again on the second floor. As Chrissie attempts to untie her friend, Hoyt and Leatherface catch her and bring her downstairs for "dinner". There, Dean sits unconscious as Leatherface slits Bailey's throat with a pair of scissors, then grabs Chrissie and tries to carry her downstairs into the basement. In the doorway to the basement, Chrissie manages to stab Leatherface in the back with a screwdriver and escapes by jumping out a window. Realizing their crimes will be discovered if Chrissie manages to escape, Leatherface furiously chases her with his chainsaw.

Dean regains consciousness, escaping to the front of the house. There he assaults Hoyt by smashing his head repeatedly into the solid concrete porch in a similar way Hoyt did to him. He then heads out to find Chrissie. Meanwhile, Chrissie hides in the old slaughterhouse. After noticing Leatherface has found her, she grabs a knife she found and hides in a tank of pigs blood. She cuts Leatherfaces' face with the knife, but before she can finally escape to freedom, he violently throws her to the ground. As he is about to kill Chrissie with his chainsaw, Dean arrives to stop him but Leatherface impales and kills him with his chainsaw. Meanwhile, Chrissie makes her way to a nearby car and seemingly escapes the nightmare once and for all.

Chrissie, desperately looking for help, sees a state trooper who has pulled someone over. As she is about to pull over, Leatherface suddenly appears to have been hiding in the back seat. He kills her by ripping his chainsaw through the back of her seat which then rips through her abdomen, and the car runs over the trooper and the man pulled over, killing both of them. Leatherface exits the car and walks back along the road to the Hewitt house.