The film opens with Michael (Noam Jenkins), a police informant, finding himself ensnared in a deadly trap created by the Jigsaw Killer (Tobin Bell). A videotaped message informs him that a Venus flytrap-like helmet full of spikes has been locked around his neck and will close on his head unless he finds the key in time. Michael realizes, through hints left by Jigsaw, that the key has been implanted behind his right eye. He finds a scalpel nearby, but cannot bring himself to cut out his own eye. When the timer runs out, the device slams shut, killing him instantly.After arguing with his rebellious teenage son Daniel (Erik Knudsen), Detective Eric Matthews (Donnie Wahlberg) is called to the scene of yet another death perpetrated by Jigsaw on account of his name being written on the wall. Noticing that a padlock on the iron maiden-like device around the victim's neck bares a Wilson Steel logo, he gathers a SWAT team and arrives at the company's abandoned factory, which has now become another lair of Jigsaw's. A set of computer monitors shows several people trapped in a mysterious house, with Daniel among them; a timer is also present, with less than two hours left. Considerably weakened by his rapidly-advancing brain cancer, Jigsaw informs detective Mathews that he will see his son in a "safe, secure state" if he can sit in the room and converse with him long enough.In the house, the kidnapped people are trying to figure out how they got there. One person is passed out on the floor and later turns out to be Amanda Young (Shawnee Smith), a familiar face from the first Saw film wherein she was the only character to escape her trap. There are six people in addition to Daniel and Amanda, and none of them knows who the others are. Amanda finds a cassette player and a note falls to the floor. She plays the cassette and they all learn that the door to the house will open in three hours but a toxic nerve gas is leaking into the house which will kill them in two hours unless they can find antidotes. One of these is in a safe in the room with them; the combination to which is said to be "in the back of [their] mind." The tape also states that the key to how they are connected to each other is marked by an X. Gus (Tony Nappo) is quickly killed while peering out the door's peep hole because Xavier (Franky G) attempts to unlock the door with a key found with the note which reads "do not attempt to use the key on the door to this room."Saw II now intercuts between Jigsaw's lair as Matthews' talks with Jigsaw in an attempt to buy time while the video signal is traced, and the captives in the house trying to secure antidotes. In the basement, they find a message for Obi (Tim Burd) revealing that he helped in the capture of everybody in the house. Soon after, he is burned to death by a furnace after attempting to take the two antidotes from inside. While he is burning, he notices a switch that COULD have turned off the fire, next to a drawing of the devil (on the tape, jigsaw says "when you're in hell, only the devil can help you out"). He dies without getting the syringes out, and everyone goes back upstairs.A door without a padlock is found and Xavier pushes in the door which starts a count-down timer. Another tape is found, in which Jigsaw condemns Xavier for being a drug dealer. A pit with thousands of used hypodermic syringes is revealed, with a key to an antidote hidden within. Instead of searching the pit himself, Xavier throws Amanda in. Amanda retrieves the key, but Xavier fails to unlock the door before the timer runs out. The antidote remains locked up.Back in Jigsaw's office, he reveals that the people trapped in the house are all criminals who were framed by Matthews at one point, and that his son may be in danger should the others discover his identity. Matthews, growing impatient with Jigsaw's philosophical ramblings, trashes Jigsaw's models and plans; Jigsaw remains unmoved.Xavier, having abandoned the others, finds a colored number written on the back of Gus' neck. Realizing this is where the combination to the safe must be hidden, Xavier pulls out a knife and tells Jonus (Glenn Plummer) to turn around. Jonus assumes Xaxier means him harm and of course fights back and almost gets away but a coughing fit stops him. Xavier takes advantage of this fit and kills Jonas to retrieve his number and begins stalking the remaining captives. Laura (Beverley Mitchell) notices an X marking a painting on the wall and upon lifting it, finds a photo tacked to the back of it. The photo shows that Daniel is the son of their arresting officer, Eric Mathews. Soon after discovering the clue, Laura succumbs to the poison.Addison somehow finds another unlocked room and stumbles upon a glass box containing an antidote, a trap meant for Gus, and becomes caught in it. If she had only taken a moment to look around, she would have seen the key hanging from the ceiling on the other side of the box. Xavier comes to Addison, alerted by her screams for help, but only to obtain her number. Rather than unlock the box, he leaves her to die of blood loss. Xavier then discovers that Daniel is Matthews' son by finding the discarded photo and hunts him and Amanda down.Watching this on the monitors in Jigsaw's headquarters, Matthews loses control and violently assaults Jigsaw, nearly killing him and ultimately forcing him to take him to the house at gunpoint. As they depart, the tech team discovers the signal going to the monitors and follows it.Xavier pursues Amanda and Daniel through a trapdoor, which leads to the bathroom trap from the first film; inside are the decomposing severed foot of Dr. Gordon and the remains of Zepp Hindle and Adam Faulkner in an advanced state of decomposition. After Xavier threatens Amanda for her number, she asks him how he intends to read his own number. In response, Xavier slices off the piece of skin from the back of his neck where it is written. Xavier then attacks a prone Daniel, but he is revealed to be playing dead and slashes Xavier's throat open with Dr. Gordon's hacksaw from the previous film.Meanwhile, Matthews arrives at the house and makes his way inside, eventually finding the trapdoor. The SWAT team, meanwhile, arrives at the location of the video signal, but it is not the same house that has been shown on the monitors in Jigsaw's lair; the events in the house took place a few hours earlier and were broadcast from tapes.Matthews arrives in the bathroom and is stabbed in the thigh with a hypodermic syringe and knocked unconscious by a person wearing a pig mask.The timer at Jigsaw's lair expires and a safe opens, revealing Daniel inside wearing an oxygen mask.Matthews awakens to find himself chained to a pipe. An audio tape lying next to him reveals that Amanda has put him there. In a series of flashbacks, we learn that Amanda has become Jigsaw's protégé, and that Matthews is her first victim, as revenge for framing her and sending her to prison where she became addicted to heroin. Amanda appears in the door and says "Game over!" before closing the bathroom door while Mathews screams threats and abuse. Outside the house, a very badly beaten Jigsaw slowly forms a smile, as he is happy that his master plan has worked perfectly.