In 1942, Vassili Zaitsev (Jude Law), a shepherd from the Ural Mountains who is now a soldier in the Red Army, finds himself on the front lines of the Battle of Stalingrad. Sent on a suicidal charge against the invading Germans, he uses impressive marksmanship skillstaught to him by his grandfather from a young ageto save himself and commissar Danilov (Joseph Fiennes). Nikita Khrushchev (Bob Hoskins) arrives in Stalingrad to coordinate the city's defenses and demands ideas to improve morale. Danilov, now a Senior Lieutenant, suggests that the people need figures to idolize, and publishes tales of Vassili's exploits in the army's newspaper that paint him as a national hero and propaganda icon. Vassili is transferred to the sniper division, and he and Danilov become friends. They also both become romantically interested in Tania (Rachel Weisz), a citizen of Stalingrad who has become a Private in the local militia. Danilov has her transferred to an intelligence unit away from the battlefield.
With the Soviet snipers taking an increasing toll on the German forces, German Major Erwin König (Ed Harris) is deployed to Stalingrad to take out Vassili and thus crush Soviet morale. A renowned marksman and head of the German Army sniper school at Zossen, he lures Vassili into a trap and takes out two of his fellow snipers, but Vassili manages to escape. When the Red Army command learns of König's mission, they dispatch his former student Koulikov (Ron Perlman) to help Vassili kill him. However, König tricks Koulikov into revealing his position and kills him with a very skillful shot, shaking Vassili's spirits considerably. Khrushchev pressures Danilov to bring the sniper standoff to a conclusion.
When Tania requests to be reassigned to the sniper division, Danilov asks Vassili to discourage her. Vassili attempts to do so, but relents when Tania tells him how her Jewish parents were murdered by the Germans. Danilov recruits young local boy Sacha Fillipov (Gabriel Thomson), who idolizes Vassili and does small jobs for the Germans in exchange for food, to act as a double agent by passing König false information about Vassili's whereabouts, thus giving Vassili a chance to ambush the Major. Vassili sets a trap for König and manages to wound him, but during a second attempt Vassili falls asleep after many hours and his sniper log is taken by a looting German soldier. The German command takes the log as evidence of Vassili's death and plans to send König home, but the Major does not believe that Vassili is dead. He tells Sacha where he will be next, suspecting that the boy will tell Vassili. Tania and Vassili have meanwhile fallen in love, and the jealous Danilov disparages Vassili in a letter to his superiors.
König spots Tania and Vassili waiting for him at his next ambush, confirming his suspicions about Sacha. He kills the boy and hangs his body from a pole to bait Vassili. Vassili vows to kill König and sends Tania and Danilov to evacuate Sacha's mother (Eva Mattes) from the city, but Tania is wounded by shrapnel en route to the evacuation boats. Thinking her dead, Danilov laments his jealousy for Vassili and his resulting disenchantment with the communist cause. Finding Vassili waiting to ambush König, Danilov intentionally exposes himself in order to reveal the Major's position and is killed. Thinking he has killed Vassili, König goes to inspect the body, but realizes too late that he has fallen into a trap and is in Vassili's sights. He turns to face Vassili, who then kills him. Two months later, after Stalingrad has been liberated and the German forces have surrendered, Vassili finds Tania recovering in a field hospital.