Harry Houdini suffers a ruptured appendix after getting punched in the stomach by a man who was unhappy that Harry discredited Lady Doyle and dies days later. Bess spends the rest of her life trying to communicate with Harry's spirit through clairvoyants, but with no success.
Young Erich Weiss sees a magician for the first time at a traveling carnival in his hometown of Appleton, Wisconsin and immediately becomes fascinated with magic. After reading about magician Robert Houdin, he changes his name to Harry Houdini and he, along with his brother Dash, begin a magic show. Now living in Brooklyn and performing on Coney Island, Harry (Adrien Brody) meets singer and dancer Bess (Kristen Connolly). On their first date, he charms her with slight of hand magic then proposes marriage to her, and she says yes. She then joins the Houdini brothers in their show, but Dash quickly realizes he is no longer needed and quits the act to start his own magic show under the name Dash Houdin.
Harry and Bess work the traveling carnival circuit for a few years before moving on to Vaudeville, where Harry begins to make a name for himself as a master illusionist. With other magicians copying his act, Harry is always looking for something new to add to his show. He begins to incorporate escape artistry into his performances, much to the chagrin of Bess. While looking for various chains and shackles to use in his show, Harry meets Jim Collins (Evan Jones), a craftsman who wants to help Harry build more and more elaborate tricks. Harry hires him on the spot as his assistant. The first device Jim builds is the Chinese Water Torture tank, which calls for Harry to be hung by his ankles while shackled and submerged head first into a phone booth-sized tank of water. Harry nearly drowns while rehearsing the trick for the first time, but he loves the tank and wants Jim to create more tricks similar to this one.
As the years go by, Harry Houdini is becoming a worldwide celebrity, and he plans on taking his show around the world. Before he leaves, he is summoned by the head of the US Secret Service. Since his tour will take him to England, Germany, and Russia, the Secret Service wants Harry to spy for them and for MI-5 on the Kaiser of Germany and the Tsar of Russia. He agrees, but is told that he cannot tell anyone, including his wife, about the spying. During the tour, Bess becomes suspicious of Harry when he makes his reports to MI-5 and thinks he is having an affair. He denies it, however Harry does have one night stands with other women after he and Bess have a fight. While all this is going on, Harry is still just a mama's boy. His non-English speaking, Hungarian-born mother, who always doted on Harry, has moved in with Harry and Bess, and he brings her along on the tour.
With the increased popularity of moving pictures, Harry's show is getting smaller crowds. He decides to take his show out of the theaters and to the general public by performing death-defying stunts. These include removing a straight-jacket while suspended in the air upside-down, and jumping off a bridge into a frozen river while shackled. Bess hates these tricks and makes Harry swear them off forever, but they have made him popular again and he decides to go on another world tour doing just illusions. Once again the Secret Service and MI-5 ask him to be a spy, and he agrees. After a performance in London, Harry meets Sir Arthur Conan Doyle, the creator of Sherlock Holmes, and his wife Lady Doyle. Harry learns that she is a spiritual medium who can speak to those who have passed away. Later on the tour, Harry learns that his mother suddenly died, and he cancels the rest of the tour and comes home.
A despondent Harry tells Dash at her funeral that he is anxious to speak to his mother again, so he goes to mediums and clairvoyants to do so. However, Harry discovers that they are fakers, so he becomes obsessed with debunking them. Still wanting to communicate with his mother, Harry goes to Lady Doyle, but she too is debunked when Harry realizes that his "mother" is speaking to him in English, not Hungarian. His public shaming of the Doyles and other clairvoyants makes Harry a marked man in their eyes. One even goes so far as to give Harry a curse. However, they all agree on one thing: after Harry dies, they can say they are speaking to him and say anything they want and claim it's him talking, and there is nothing he can do about it.
Years later, Harry is touring again, and has brought back some of Jim's tricks into the performance. During a matinee show in Detroit, while performing the Chinese Water Torture, his ankle is broken. Despite the injury, he wants to continue the tour. Between performances, Harry is talking with some college students, and one of them is arguing with him about mediums. He is particularly angry that Harry discredited Lady Doyle. The student then brings up the fact that Harry can take a strong punch to the stomach, something demonstrated several times during the movie. Without a chance to prepare himself, the student punches Harry several times, seriously injuring him. Despite the pain, Harry goes on stage for the evening performance, but almost immediately collapses. He is rushed to the hospital, where he is diagnosed with a ruptured appendix. However, by the time the surgeon began the operation, it was already infected and gangrenous. Days later, after a tearful goodbye to his wife, Harry Houdini dies at the age of 52.
The movie ends with Bess visiting a clairvoyant in an attempt to communicate with Harry. Title cards then state that Bess spend the final 17 years of her life trying to communicate with Harry, but with no success.