Seth Baxter (Joris Jarsky), a convicted murderer who was released early from prison on a technicality, is chained to a table beneath a pendulum blade. A videotaped message informs him that in order to survive, he must crush his hands by putting them into two presses and pushing the buttons inside. Even though he does so, the pendulum swings down and slices him in half. The fact that the trap was inescapable marks it as a creation of someone other than John Kramer (Tobin Bell).

In a scene from the end of Saw IV, Agent Peter Strahm (Scott Patterson) enters the room containing the corpses of John Kramer, Amanda Young and Lynn Denlon, and shoots Jeff Reinhart (Angus Macfadyen) dead in self-defense. As he examines Jigsaw's corpse, he is trapped in the room by Lieutenant Mark Hoffman (Costas Mandylor). Discovering a hidden door that leads into a passage and a microcassette that urges him not to proceed any further, he moves down the passage and is attacked by a figure in a pig mask. Regaining consciousness, he discovers that his head is trapped in a small glass box that begins to fill with water. A self-administered tracheotomy using a pen keeps him breathing until the police arrive at the Gideon meatpacking plant, where Hoffman emerges carrying Jeff's daughter Corbett (Niamh Wilson), claiming that they are the only survivors until Strahm is brought out alive as well.

Jill Tuck (Betsy Russell), John Kramer's ex-wife, receives a videotape and a locked, wooden box from John's lawyer. On the tape, John tells her that the items in the box are of "grave importance" and that she will know what to do with them. She unlocks it with a key on a chain around her neck. After looking inside, she takes the box and hurries away without revealing its contents. Meanwhile, the chief of police announces an end to the Jigsaw murders and promotes Hoffman for closing the cases.

Strahm begins questioning Hoffman's innocence upon learning that Agent Perez said Hoffman's name before dying from the wounds inflicted on her by the exploding Billy doll. Gathering up all the files on Jigsaw’s victims, Strahm revisits some of the crime scenes and pieces together Hoffman's involvement: Hoffman set up the inescapable pendulum trap to kill Seth (who murdered Hoffman's sister) and blamed it on Jigsaw, who used his knowledge of these events to blackmail Hoffman into becoming his accomplice.

Meanwhile, in a sewer, Ashley, Charles, Brit, Mallick, and Luba Gibbs wake up in a trap in which collars are locked around their necks, strung on a cable connected to a set of guillotine blades mounted on the wall behind them. The keys to the collars are in glass boxes at the other end of the room. All but Ashley (Laura Gordon) are able to escape in time; she is decapitated when the collars are automatically pulled back to the wall and into the blades.

In the next room, the four survivors must break jars hanging from the ceiling and find three keys to shelters that can protect them from the room's bombs. Charles (Carlo Rota) is left to die in the explosion after Luba (Meagan Good) knocks him down and takes a key that he had taken from Mallick (Greg Bryk). The third room requires five electrical cables to be connected to a bathtub full of water in order to unlock the door (set to a countdown timer), but they are all too short to reach it. Luba attempts to use Mallick to complete the circuits, whereupon Brit (Julie Benz) fatally stabs her in the neck. By throwing her body in the tub and hooking all the cables to it, Brit and Mallick get the door open.

The exit door to the fourth and final room can only be opened by filling a beaker with ten pints of blood, to be obtained by the captives putting their arms into a box fitted with circular saws. Brit realizes that the five of them were meant to work together so that they could all survive to this point, and that each had been involved in a recent fire that killed eight people. With no other options, she and Mallick begin sawing their arms to fill the beaker themselves.

While these games are playing out, Hoffman steals Strahm’s cell phone and uses it to make Strahm’s boss, Dan Erickson (Mark Rolston), suspect that Strahm is Jigsaw's accomplice. He plants the phone and Erickson's own personnel file outside the exit from the fourth room, and Erickson arrives there just as Brit and Mallick get the door open. Both pass out from blood loss as Erickson calls for backup; he then puts out an all-points bulletin for Strahm's arrest.

Strahm’s investigation brings him to a small underground room that contains a transparent box full of glass shards. A recorder inside the box delivers a message from Hoffman: Strahm will have to trust him and get in the box if he wants to survive. Instead, Strahm stops the tape short and ambushes Hoffman when he enters the room, eventually throwing him into the box and closing it. When the door to the room suddenly slams shut and locks, Hoffman advises Strahm to finish the tape. As the box sinks into the floor, the tape explains that if Strahm does not comply, he will die in that room with Jigsaw's legacy becoming his own. Strahm then attempts to escape the room when the walls begin to move inward, but is eventually crushed to death while Hoffman watches from below.