In 1988, Donnie Darko (Jake Gyllenhaal), a brilliant teenager, has been seeing a psychiatrist, as he seems to be going through a particularly painful puberty. His mother becomes worried about him, after his sister suggests over dinner that he hasn't been taking his medication. Later that night (October 2) Donnie is awakened by a voice and goes downstairs as if sleepwalking where he meets Frank (James Duval), a man in a menacing rabbit costume. Frank tells him that in 28 days, 6 hours, 42 minutes and 12 seconds, the world will end. While he is outside, a jet engine crashes through Donnie's bedroom.

Jim Cunningham (Patrick Swayze) wakes Donnie where he had fallen asleep on the golf course. Donnie notices his forearm where the numerals 28:06:42:12 are written in jagged script. Returning home he is surprised to find police and firemen have cordoned off his home. Donnie is told a jet engine has fallen through his room, although it is unknown where it came from.

As Eddie, Donnie's father, drives him to the office of his therapist, Dr. Lillian Thurman (Katharine Ross), Eddie nearly runs over Roberta Sparrow (Patience Cleveland), also known as "Grandma Death": a seemingly senile old woman who spends her days walking back and forth from her house to a mailbox for a letter that never comes. Grandma Death whispers something in Donnie's ear that startles him. It is later learned that she had whispered, "every living creature on earth dies alone."

In his English class, Donnie meets a new student, Gretchen Ross (Jena Malone). Meanwhile, Frank continues to appear to Donnie and tell him that he can do anything and will not get caught. Frank also tells Donnie about time travel, further confusing him. Donnie, apparently at Frank's urging, commits several acts of violence against property; flooding the school and torching the home of Jim Cunningham, an inspirational speaker. Cunningham's methods have been much admired by Kitty Farmer (Beth Grant), one of the teachers at Donnie's school.

Gretchen and Donnie grow closer. She is one of the few people he opens up to about his time-travel visions. Dr. Thurman increases Donnie's medication and begins hypnotherapy with him. Frank continues to appear to Donnie.

With the inspirational speaker, Jim Cunningham, accused of running a "kiddie porn dungeon", Kitty Farmer asks Donnie's mother to accompany the school's dance team to LA for an appearance on the show, Star Search. Donnie's older sister, Elizabeth (Maggie Gyllenhaal), and Donnie decide to throw a Halloween party while their mother, Rose (Mary McDonnell), and younger sister, Sam (Daveigh Chase), are away. The night of the party, October 30, Gretchen comes to Donnie's house for safety because her mother has suddenly disappeared.

At midnight, Donnie realizes that the 28 days have passed, and that only 6 hours remain until the end of the world. Convinced that Grandma Death is in some way connected to Frank, Donnie persuades Gretchen and two other friends to leave the party and go with him to her house. There, they are assaulted by the high school bullies (Alex Greenwald and Seth Rogen). Gretchen is knocked unconscious and thrown into the street. An approaching car scares the bullies off but swerves to avoid Grandma Death who is standing in the road and runs directly over Gretchen. Stopping the car, Frank gets out and starts yelling at Donnie, who lifts his father's stolen pistol and shoots Frank through his right eye (a wound seen earlier as the 'menacing rabbit' Frank pulled off his mask).

Grandma Death tells Donnie (Director's cut) that he must hurry as a storm is forming and he has a lot to do. Donnie can't wake Gretchen and ends up carrying her lifeless body to his home. There he kisses his sleeping sister's forehead, grabs some keys and speeds away in the family car with Gretchen. We see a strange, inverted, black cloud forming over Donnie's house. Next Donnie watches from some road in the hills above town as a tornado forms over the city. Donnie seems at peace now, as a vortex engulfs the jet his mother and sister are returning home in, apparently they are caught up in the storm above Donnie's home. Suddenly the jet is shaken violently and we see the engine torn from the wing and begin to fall, creating a whirling pathway through the sky.