Meg Altman (Jodie Foster), recently divorced from the owner of a pharmaceutical giant, and her 11-year-old daughter Sarah (Kristen Stewart), who has diabetes, have just purchased a four-story brownstone townhouse on West 94th Street that was previously owned by a disabled, reclusive millionaire. It has a panic room, an isolated room used to protect the owner from an intruder that is protected by a four-inch-thick steel door and an impressive security system, and features a separate phone line. On the night the two move into the home, it is broken into by Junior (Leto), the grandson of the previous owner, and Burnham (Whitaker), an employee of the security company used by the residence. The two are after $3 million in bearer bonds, which is locked inside a floor safe in the panic room. Unknown to Burnham until after they've broken in, Junior has recruited Raoul (Yoakam), a bus driver who lives in Flatbush, to assist in the heist.
After discovering that the Altmans have moved into the home one week before they anticipated, Junior convinces a reluctant Burnham to go on as planned with the heist. However, Meg wakes up and discovers the intruders from the CCTV monitors in the panic room when she wanted to switch off its glaring light. Before the three can stop her, she runs to Sarah, wakes her, and they escape to the panic room.
The Altmans make several attempts to call for help, including signaling a nearby neighbor (whom they can only see through the opening of a ventilation pipe) with a flashlight and tapping into the main telephone line to call for help (because Meg has not yet hooked up the panic room's phone). Only one works; the two get through to Meg's ex-husband and Sara's father, Stephan, before the burglars cut them off. To make matters worse, Sarah suffers a seizure due to hypoglycemia caused by her diabetes and unfortunately her emergency glucose syringe is in the refrigerator, located in her bedroom upstairs.
When all attempts to get into the room fail, Junior, who's been burned on his forearm and part of his face, lets it slip that there is much more money in the panic room than he let on, and gives up. Upon trying to leave the house, Junior is shot in the head by Raoul, who forces Burnham, at gunpoint, to finish the robbery. Stephan Altman arrives at the home and is then taken hostage by Raoul and Burnham. Raoul severely beats him. They then use the unconscious Altman to trick Meg (who is desperate to get the glucose syringe for Sarah) into momentarily exiting the panic room. Raoul ambushes her and a brief struggle ensues which ultimately results in Raoul, whose fingers are crushed by the sliding steel door, and Burnham becoming trapped in the panic room with the critical Sarah, and Meg outside with Raoul's gun. However Meg was able to throw in the glucose syringe in time and begs the two intruders over the intercom to give Sarah the injection, which Burnham, being the more humane of the two, later does.
However, two police patrolmen arrive, having received a call from Stephan earlier. With Sarah trapped with the two burglars, and Raoul threatening to kill her, Meg lies to the officers. Meanwhile, Burnham gets to work on the safe and obtains the bearer bonds, worth $22 million. As the duo attempt to leave while using Sarah as a hostage, Meg and the badly injured Stephan attack them. After an intense struggle, Burnham flees while Raoul prepares to kill Meg with a sledgehammer. However, upon hearing Sarah's screams of terror, Burnham doubles back and kills Raoul, which delays him enough that he gets caught by the police who return as the earlier patrolman was suspicious at Meg's behavior. As they approach, he releases the bonds, letting them fly off into the night and kneels in surrender.
Following the trouble with the home invasion Meg and Sarah begin searching for a new house in the newspaper.
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