At his manor in Sarajevo, Bosnia, Ra’s al Ghul realizes his mistake in allying with the Joker and using him as a distraction for the Dynamic Duo while Ra’s himself tried to cripple the world economy by destroying financial districts in Europe. Meanwhile, the Joker has kidnapped Jason Todd, the second Robin, and brutally beats him with a crowbar in an abandoned warehouse while Batman races there. The Joker then leaves Jason locked in the warehouse with a bomb. Batman arrives just in time to watch the warehouse explode, killing Jason.
Five years later in Gotham City, a man called the Red Hood assembles a meeting with the city’s most notorious thugs and dealers, announces his takeover of their drug trade, and tosses them a bag containing the severed heads of all their lieutenants as a warning. Elsewhere, Batman stops an attempted theft of a shipment belonging to Black Mask, revealed to be Amazo. Batman fights Amazo with the help of Nightwing, and after a short fight, the robot is defeated. Interrogating the thieves, Batman learns they are working for the Red Hood, before the Red Hood himself kills them. Batman chases the Red Hood, who leads him to the Ace Chemical Plant, the site of the first Red Hood’s transformation into the Joker, and escapes.
Batman and Nightwing go to Arkham Asylum to interrogate the Joker about the Red Hood, but he merely taunts Batman about Jason’s death, then denies any involvement with his successor. Meanwhile, Black Mask, enraged that Amazo was destroyed, puts a hit on the Red Hood. After learning of Black Mask’s next shipment, the Red Hood hijacks the helicopter carrying it, but is stopped by Batman and Nightwing. The Red Hood flees and Batman and Nightwing pursue him. During the chase, the Red Hood performs maneuvers similar to Batman and Nightwing. The chase ends at a train station, where the Red Hood escapes, detonating a bomb that incapacitates Nightwing. In the Batcave, Batman, reviewing video footage of the chase, realizes the Red Hood knows his true identity. He then recalls Jason performing the same maneuvers he had seen the Red Hood use. In addition, a flashback reveals that as he got older, Jason grew more violent.
In the present day, the Red Hood is attacked by a group of four assassins who overpower him. Batman then appears and helps the Red Hood battle the group. They incapacitate three, but Batman is horrified when the Red Hood kills the fourth. After having an argument over how to fight crime, Batman tries offering the Red Hood help, but the Red Hood replies that it is too late and leaves. Batman obtains a blood sample from the Red Hood, and the analysis is a match to Jason. Later on, after surviving an assassination attempt by the Red Hood, Black Mask decides to set the Joker free and give him the task of killing the Red Hood. Meanwhile, Batman goes to the mansion of Ra’s and demands to know the truth about Jason. Ra’s reveals that he stole Jason’s body and revived him in his Lazarus Pit since he felt responsible for his death. Following his resurrection, however, Jason went wild and escaped.
On his way back to Gotham, Batman finds that the Joker has abducted the Red Hood’s crime bosses, as well as Black Mask. As the Joker tries to set his hostages on fire, the Red Hood appears and reveals that the Joker is his real target. Batman appears and tries to take the Joker with him, but the Red Hood abducts him first, instructing Batman to come to Crime Alley. At an abandoned apartment, the Red Hood beats the Joker with a crowbar, then later confronts Batman. During the fight, the Red Hood takes off his helmet, revealing that he truly is Jason. Fleeing back to the apartment, Jason tells Batman that he forgives him for not saving him, but confronts him over his anger that he still allows the Joker to live. Batman confesses that he always wanted to kill the Joker, but will not allow himself the pleasure out of fear of fully succumbing to it.
Jason then tosses Batman a gun and tells him that he must shoot him unless one of them shoots the Joker. Batman refuses and drops the gun. Angered, Jason shoots at Batman, but Batman dodges the bullet and throws a small batarang into the barrel of the gun, exploding it. Defeated, Jason sets off a bomb he had previously planted in the room. The Joker maniacally attempts to stop Batman from defusing it, but Batman subdues him. The bomb goes off; while Batman and the Joker survive, Jason is nowhere to be found. Later, Alfred asks Batman if he should remove the memorial display case containing Jason’s Robin uniform. Batman replies that nothing has changed between Jason and him and departs in the Batmobile. A flashback is then shown of Jason’s first day in his Robin costume, which he declares is the best day of his life.