Lynn, a very good doctor, is kidnapped by Amanda to prolong Jigsaw's life. If Jigsaw dies, Lynn will be killed by a collar that will simultaneously fire six shotgun shells at her face should Jigsaw flat-line. This occurs while Jeff goes through a series of tests.
Jeff encounters three people who he blamed for the death of his son. The first, an eyewitness who never testified, dies by being frozen to death before Jeff can save her, despite his effort. The second, the judge who gave a reduced sentence to the man who killed Jeff's son, is freed of being drowned in swine crud by Jeff, but later meets his fate in the third room, which holds Thomas, the man who drove the car that accidentally hit Jeff's son. Thomas felt nothing but pain ever since, which was why the judge went easy on him. Thomas is being contorted by a giant machine while Jeff attempts to free a key from a string that will pull the trigger of a shotgun. After he releases the key, the shotgun goes off anyway, killing the judge. Jeff attempts to free Thomas, but it is too late, as his head nears a forced 180° turn.
Back in Jigsaw's room, we learn more about Amanda's past, and how she came to be Jigsaw's apprentice. Not only was Amanda in on all of part II with Jigsaw, she also played a major part in the main setup of part I (!!). Jigsaw talks to Lynn, and Amanda becomes jealous, to the point where she threatens to kill Lynn with a handgun she took from Eric Matthews (remember from part II?). He got free of the chain and attempted to escape sooner than Amanda thought he would. Amanda also felt that Eric learned nothing from Jigsaw's test, so she killed him. She also had come back in part I to finish the job on Adam, because she felt he deserved mercy. In essence, she was eventually getting pleasure from watching people die, as well as actually killing them, which is not what Jigsaw wanted. But he tried time and again to instill in her a sense of forgiveness, much like he was trying with Jeff.
The final room brings Jeff face to face with the man who claims to be "really" responsible for the death of his son, Jigsaw, who is being cared for by none other than Jeff's wife Lynn. He interrupts an argument between Lynn, Jigsaw, and Amanda. Against Jigsaw's instruction, Amanda pulls the trigger, shooting Lynn in the abdomen. Jeff immediately breaks in and fires a single shot into Amanda's neck.
As Amanda is dying, Jigsaw explains that she has failed his final test, a test of her willpower, the test which, if she passed, would have allowed her to continue Jigsaw's legacy after he died. With Amanda dead, Jigsaw tries to get Jeff to forgive him the way Jeff had inadvertently forgiven those he blamed for his son's death (trying to save their lives). Jeff says that he forgives Jigsaw, just before giving him a power saw to the throat. With his dying breath, Jigsaw plays a tape explaining that since Jeff wants to live a life of vengeance, all the tools are there in his workshop, as well as his kidnapped daughter who will now have to grow up with no brother, no mother (Lynn is about to have her head blown away), and a father who cares nothing more than to seek revenge. As Jigsaw dies, we see clips from the last two movies, and know that it is all over.