Leon K, an American college student in Southeast Asia for the summer, goes to Thailand with the intention of experiencing something radically different from his familiar life. He meets Jake, a traveler who is crazy and rants on about a beach paradise on a secret island and the parasites of civilization. Jake later commits suicide but leaves Leon a map to the island, convincing him that it exists.
Leon meets a couple, Claire and her boyfriend, Piers, and persuades them to accompany him to the island, partly out of an infatuation with Claire. They travel from Bangkok to the shores of the Gulf of Thailand, where Leon befriends a pair of American surfers, Louis and Ellis . They talk excitedly about the myth of a beach and how it has an almost unlimited supply of marijuana. Leon does not admit his knowledge, but copies his map and slides it under their door the next morning.
To finally reach the island, Leon, Claire and Piers must swim across to it. When they first arrive on the island, they come across an enormous marijuana plantation guarded by local farmers armed with assault rifles. They manage to evade detection. After jumping off a high cliff and landing in a lake below, they are seen by Lee, who takes them to the beach community. They are cautiously interrogated by the island's leader Ada, regarding their knowledge of the island, but are accepted. The trio are introduced to everybody and over the next few days go on to become integrated into the community.
One night while Leon and Claire are walking down the beach, she tells him that she is falling in love with him. They swim out into the ocean, where Claire kisses Leon and has passionate sex with him on the beach. Despite their attempts to keep the romance a secret, the whole island finds out about it, including Piers. Although devastated, Piers says he will not stand in their way if Claire is happier with Leon.
At first the island and its community seem to live up to their idyllic reputation. Leon swims out into the ocean to catch fish with a harpoon and is attacked by a young mako shark, but he stabs it to death with a knife, which gains him much admiration. Events take a turn for the worse when Leon is chosen to accompany Ada to the mainland to acquire supplies, where Leon is inadvertently reunited with the American surfers Louis and Ellis who are preparing to go to the beach with two girls, Zoey and Rochelle. Ada overhears their conversation about the copy of the map and confronts Leon, who admits his guilt. In exchange for Ada's silence and Leon's return to the island, Ada blackmails Leon into having sex with her that night.
When they return to the island, everything returns to normal until two of the fishermen named Ben and Nick are attacked by a shark while fishing in the ocean. Nick dies almost immediately and Ben is severely injured. The only options for Ben are to go to the mainland to get medical help or stay on the island and take his chances. Ben chooses to stay, not wanting to go near the water after his encounter with the shark, but Ada refuses to allow a doctor to come to the island. Ben's condition worsens, consistently lowering the morale of the whole community, so they take him out into the middle of the jungle and leave him to die. However, Piers, disgusted by the group's decision, vows to stay with Ben.
Later, Ada observes the American surfers on the neighboring island and assigns Leon the task of watching them so he can obtain the map and destroy it. While he is waiting for the surfers to arrive, Claire shows up, furious and heartbroken, saying that Ada has told everybody about her affair with Leon in the mainland. Leon cannot cope with his task and retreats into the forest where he becomes temporarily insane, believing that he is communing with the long-dead Jake, and by this point declaiming (in voice over narration) "the longer I'm away from the community, the less I miss them". He evades the other islanders and sets lethal traps in an attempt to keep them at bay, at times hallucinating that he is a character in a video game. Leon also sneaks near the sleeping marijuana farmers and tampers with their guns.
Meanwhile, the surfers reach the island but are discovered and killed by the marijuana farmers, Joel, Elle, Riely and Bill before they can get to the beach. Leon witnesses their executions and runs to evade getting caught by the farmers. After escaping from the farmers, Leon retreats to the community to convince Piers and Claire to leave the island, believing that all their lives are now in danger. Piers refuses, not wanting to leave the emaciated Ben, whose leg has become gangrenous. When the other two briefly leave the tent, Leon tearfully smothers Ben to death in a mercy killing. When he leaves the tent however, he is struck across the face by a farmer and knocked unconscious.
He wakes up in a tent in pain, surrounded by the community and the farmers. The farmers approach Ada, with whom they had an agreement where the lead farmer, Joel, gives her a gun loaded with a single bullet and an ultimatum: shoot Leon dead and be allowed to stay, or leave the island forever. Ada approaches Leon angry that he ruined everything and fires an empty chamber, throwing the crowd into chaos. The lead farmer smiles as the community instantly disintegrates. Ada collapses in a flood of tears, as the crowd, now in hysterics, flees to get away from the island. Together, they swim back to the mainland and go their separate ways.
The film ends with Leon stopping by an internet cafe to check his e-mail. He receives a message from Claire entitled "beach life" which contains a photograph of the beach community and an animated handwritten inscription over the image: Love Claire x.