Prior to a new hotel opening on Amity Island, an enormous great white shark ambushes and kills two divers who are photographing the wreck of the Orca, the late Quint's boat. A couple of days later, their camera is recovered, and the shark goes after a female water skier and speedboat driver, devouring the skier while the driver fends off the shark using a gas tank and flare gun, causing the boat to explode, which kills her and severely burns the shark's head.
Along with these disappearances, a killer whale bearing large wounds is beached. Police Chief Martin Brody believes these events are the work of a shark. Brody explains his concerns to Mayor Larry Vaughn, who highly doubts the town has another shark problem. Later, Brody finds debris from the destroyed speedboat in the surf just off the beach. He wades over to retrieve it and uncovers the boat driver's burnt remains.
The following day, at the beach, Brody sees a dark shadow that approaches the swimmers. Thinking it is a shark, he frantically orders everyone out of the water and causes a panic by firing his gun. However, the shadow is revealed to be a school of bluefish, making people think Brody is insane. His fears are confirmed when he acquires a close-up picture of the shark from the diver's camera. The Amity town council, including local developer Len Peterson, deny the evidence and fire Brody.
The next morning, Brody's teenage son Mike disobeys his father by sneaking out to go sailing with his friends after his love interest Jackie Peters goads him to, but his younger brother Sean catches him and persuades Mike to bring him along. After an argument at the dock, Marge, one of Mike's friends, playfully lets Sean come in her boat with her, and after a couple other grouping arrangements, they head out, going past a team of divers, led by instructor Tom Andrews. Moments after going underwater, one of the divers encounters the shark. Panicking, he rushes to the surface, causing an embolism. Soon after, the shark hits teenagers Tina Wilcox and Eddie Marchand; Eddie falls in the water and is killed by the shark.
Brody and his wife Ellen follow an ambulance to the docks, where they find Tom as he is put on a stretcher; the divers suspect something scared him underwater. Deputy Len Hendricks, Brody's replacement, tells them Mike went sailing with his friends, so Brody, along with Ellen and Hendricks, takes the police boat to rescue them. They come across Tina's boat, and find her hiding in the bow; she fearfully mentions the shark's presence. Hendricks and Ellen take Tina to shore, where the truth is revealed, while Brody goes on to find the kids.
Meanwhile, the shark attacks the other kids, hitting one of their boats and causing most of them to capsize and crash into each other in the ensuing panic, throwing several of them, including Mike and Sean, in the water. The other teens help them out of the water while two of them pull Mike out as the shark goes for him and head back to get help. Sean and the others remain adrift on the wreckage of tangled boats. A Coast Guard marine helicopter that Brody contacted arrives to tow them to shore. Before the pilot can tow them, the shark attacks and sinks the chopper with the pilot at the controls. It then knocks Sean into the water, but Marge sacrifices herself to save him.
Brody runs into Mike, who tells his father that Sean is with his friends, drifting towards Cable Junction, a small island housing an electrical relay station, and apologizes for not knowing about the shark. Brody accepts his apology while telling him to get to safety and quickly finds them, but when the shark reappears, he panics and maroons the police boat on Cable Junction. He then tries to pull them with a winch but hooks an underwater power cable. The shark's next attack sends most of the teenagers into the water, and they swim to Cable Junction while Sean and Jackie are trapped on the boats. Using an inflatable raft, Brody hits the power cable with an oar to attract the shark and encourages it to bite the cable; the shark is fatally electrocuted, and its corpse sinks to the bottom of the sea. The shaken kids rejoice as Brody picks up Sean and Jackie and they join them on Cable Junction to await rescue.
Roy Scheider as Chief Martin Brody
Lorraine Gary as Ellen Brody
Murray Hamilton as Mayor Larry Vaughn
Joseph Mascolo as Leonard "Len" Peterson
Jeffrey Kramer as Deputy Hendricks