The East India Trading Company arrives in Port Royal, Jamaica, to extend its monopoly in the Caribbean and purge piracy from its waters. Leading the expansion is Lord Cutler Beckett, a powerful and ruthless EITC agent who arrests Will Turner and Elizabeth Swann as they are about to be married. Beckett threatens to execute them and the absent ex-Commodore James Norrington for aiding Captain Jack Sparrow's escape, but he offers clemency if Will agrees to hunt for Sparrow and his magical compass which points to what its possessor wants most. An informant in Tortuga leads Will to the Black Pearl run aground on Pelegosto, a cannibal-inhabited island where Jack and his crew are captive. Jack hid there after "Bootstrap Bill" Turner, Jack's former crewmate and now an indentured sailor aboard Captain Davy Jones' ghost ship, the Flying Dutchman, delivered Jack the Black Spot, a mark signifying his debt to Jones is due. Thirteen years before, Jones raised the Pearl from the ocean depths and made Jack its captain. In exchange, Jack must now serve aboard the Dutchman for 100 years, or be hunted by Jones' beast, the legendary Kraken.

Will, Jack, and a few crew members escape their captors, unexpectedly recruiting Pintel and Ragetti along the way, and head for sea. Will learns that Jack has been searching for a particular key. Jack agrees to give Will the compass if he helps him find the key and the object it unlocks. Seeking assistance from Tia Dalma, an obeah priestess, Jack learns the compass fails to work because he does not know what he truly wants. The key, Tia tells him, unlocks the Dead Man's Chest containing Davy Jones' still-beating heart—to avoid lost love's pain, Jones carved the heart from his chest and buried it. Whoever possesses the heart controls Davy Jones, thereby controlling the world's oceans. Back at sea, the Dutchman encounters Sparrow, who deviously attempts to barter Will in exchange for himself. Jones demands 100 souls within three days in exchange for Jack's freedom and keeps Will as a "good faith payment," leaving Jack only 99 more souls to harvest.

In Port Royal, Governor Weatherby Swann frees Elizabeth. Confronting Beckett at gunpoint, she forces him to validate a Letter of Marque—a royal document with which Beckett intends to recruit Sparrow as a privateer, and which Elizabeth wants for Will. Posing as a cabin boy on a merchant vessel, Elizabeth lands in Tortuga where she finds Jack and Gibbs desperately recruiting unsuspecting sailors in a pub to pay off his blood debt. A disheveled Norrington also applies (having lost everything-his ship, his career and his purpose in life- after failing to catch Sparrow while pursuing the Black Pearl into a hurricane). Blaming Sparrow for his ruin, he tries to shoot him and ignites an angry brawl, but Elizabeth knocks Norrington out and saves Sparrow. At the pier, Jack reveals the compass' secret to Elizabeth; it points to what the holder wants most in the world. When he convinces her that she can save Will by finding the chest, she gets a bearing. Once the ship is underway, however, an attraction arises between Jack and Elizabeth.

On Isla Cruces, Jack, Norrington, and Elizabeth find the Dead Man's Chest. Will, who has escaped the Dutchman with help from his father, Bootstrap Bill, arrives with the key he stole from Davy Jones. Will wants to stab the heart to free his father, but Jack fears that with Jones dead, the Kraken will continue hunting him as there will be no one to call it off, while Norrington desires the heart to bargain back his naval career. As a three-way swordfight erupts, the arrival of Jones' crew and Pintel and Ragetti's attempt to make off with the chest complicate matters even more. Norrington ultimately escapes with the heart and the Letters of Marque while Jones' crewmembers retrieve the now-empty Dead Man's Chest.

The Dutchman pursues the Pearl but, with the wind behind them, the Pearl outruns her. Jones summons the Kraken. Jack escapes the Pearl in the last longboat; but unable to desert his crew, he returns in time to save them. After a fierce battle that kills every crew member except for Will, Jack, Gibbs, Pintel and Ragetti, Marty, Cotton, and Elizabeth, he gives the order to abandon ship before the Kraken makes its final assault. ‎Realizing the Kraken is only hunting Jack, a deceptive Elizabeth kisses him while handcuffing him to the mast as bait. Wracked with guilt over her betrayal, Elizabeth tells the others Jack chose to remain behind, unaware that Will now believes she loves Sparrow. Jack escapes the shackles just as the Kraken resurfaces: Jack draws his cutlass and goes down fighting as the Kraken lunges for him; the colossal beast drags him and the Pearl to a watery grave.

Davy Jones declares Jack's debt settled, although he becomes enraged when he discovers an empty Dead Man's Chest. Meanwhile, Norrington makes his way to Port Royal and delivers the heart of Davy Jones and the Letters of Marque to Cutler Beckett. Elizabeth, Will, and the surviving Pearl crew seek refuge with Tia Dalma, who asks if they would be willing to save Jack from Davy Jones' Locker. When all agree, Tia Dalma sends them on a journey to World's End to rescue Jack, saying they will need a captain who knows those waters; the resurrected Captain Barbossa.

After the credits, it shows the pirate's dog, which was earlier chased away, being worshipped by the cannibals.