The film opens with New York City police detective John McClane coming to Los Angeles to reunite with his estranged wife for the Christmas holidays. He meets her at her place of work, a large office building called The Nakatomi Plaza, which is in the middle of a Christmas party. After an initial meeting which included strained greetings with her boss and an oily colleague, the couple have an argument over their separation and her decision to address by her maiden name. Holly rejoins the party while John stays in a room kicking himself for picking a fight with his wife.
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Unknown to them, a gang of terrorist lead by Hans Gruber invades the building and seizes control of the building's security and communication systems as they isolate it from the outside. Then they take the entire staff of the Nakatomi head office hostage and take the regional director for some private business. Once alone, they reveal that they are not terrorists, but actually criminals who are posing as terrorists in their plan to rob $600 million dollars worth of Bearer bonds from the Nakatomi Building's main vault. When the director refuses to give the access codes to the vault, he is shot dead and the gang implement their secondary plan to break into the vault. Secretly, they are also planning to murder all their hostages in a cold-blooded scheme to fake their deaths to hide their escape.
John McClane manages to slip away and, shoeless and armed only with his sidearm, tries to call for the authorities. However, that proves to be a difficult task since when he pulls the fire alarm, the gang detects it and call the Fire Department off. The youngest member of the gang is sent to investigate and kill the meddler, but John kills him instead. Grabbing his two way radio, McClane desperately calls for help, but the police don't believe him and are more concerned about him making another false alarm. McClane offers to give himself up if they would send an officer to arrest him at the building, but only when the police hear automatic weapons fire as three of Gruber's minions attack McClane do they respond. Unfortunately for McClane, Gruber's gang overhears this attempt and already have a member in the lobby to pose as a security guard to divert investigators. While McClane is fighting for his life, Sgt. Al Powell is sent to investigate the building and is fooled into thinking all is in order. After killing the goons, McClane learns to his horror that the cop who is his last chance to get help is leaving. In one last desperate effort, McClane throws one of the dead criminals on top of the cop's car and fires on it, forcing the cop to frantically call in back up.
Now having definite proof of a terrorist attack, the police respond in full force with all their resources. However, while it is sooner than they had wanted, this was part of Hans Gruber's plan to break into the vault by manipulating the authorities into inadvertently assisting them in their break in and subsequent escape. The problem for them is that John McClane, seeing the apparent incompetence of the LAPD, is forced to take action and fight the terrorists from inside and more importantly, he also has the critical detonators that were one of his slain opponent's responsibility. What follows is a cat and mouse game as Hans Gruber tries to implement his group's plan while recovering the detonators and simultaneously trying to stop McClane from interfering further.
Eventually, after numerous deadly engagements, where McClane's only confidant over his radio among the hostile police force is Sgt. Al Powell, the detonators are recovered but McClane figures out the death faking plan which involves exploding the roof with the hostages on top. He manages to drive the hostages off the roof and barely manages to escape himself when Gruber sets off the explosion. Meanwhile, the main power is cut by the FBI which allows Gruber's gang to bypass the last of the obstacles and enter the vault. Meanwhile, an irresponsible TV reporter finds out about McClane's activity in the building and goes to his children's home for an easy news story. This alerts Gruber that Holly, who wisely hid her marriage to John from him, is an ideal hostage.
The film climaxes with a battered and beaten McClane, who just had to defeat the brutally vengeful older brother of his first opponent, confronting Gruber one last time. With only two bullets in a gun he hid on his back, McClane manages to kill two of the remaining three gang members, including Gruber and rescues Holly while his chauffeur from the airport who was trapped in the locked down parking garage, manages to capture the remaining terrorist who was making an escape.
A little known fact: the movie is based on a 1970's novel by Roderick Thorp called "Nothing Lasts Forever." It is a sequel to another book, "Detective," which was also made into a movie. The book's hero is Joe Leland, a cop who is in a Los Angeles skyscraper when a terrorist (Tony Gruber) takes over the building, with his daughter in it. Leland must battle the terrorists and rescue his daughter. Although the book was written some years before Die Hard's 1988 release, it has many parts that are very similar to the movie.