Peter Parker struggles to balance his personal life with his crime-fighting as Spider-Man. He juggles multiple jobs and faces overdue rent and schoolwork as his aunt May is facing eviction. Daily Bugle editor-in-chief J. Jonah Jameson criticizes Spider-Man in the paper, and Peter's best friend, Harry Osborn, blames Spider-Man for his father Norman Osborn's death,[a] and resents Peter for not revealing Spider-Man's identity. To protect her, Peter has distanced himself from Mary Jane Watson, despite their mutual romantic feelings. Tired of Peter's secrecy, Mary Jane gets engaged to Jameson's son, John.
Now a leader at his father's company, Oscorp, Harry funds the development of a fusion power machine created by nuclear scientist Otto Octavius, who befriends and mentors Peter. During a public demonstration hosted by him and his wife Rosie, Octavius uses a harness with four mechanical tentacles controlled by artificial intelligence to interact with the machine. The fusion reaction destabilizes, threatening mass destruction and killing Rosie, but Octavius refuses to shut it down. The harness becomes fused to his body, and the inhibitor chip restricting the tentacles' AI is destroyed. Octavius is taken to a hospital where doctors prepare to surgically remove the harness, but the tentacles, having gained sapience without the inhibitor chip, kill the crew. Octavius, now under the tentacles' influence, flees to a derelict harbor warehouse, where he plans to rebuild the machine. While robbing a bank to fund his plan, Octavius takes May hostage, but Peter rescues her.
Overwhelmed by stress, exhaustion, and the conflict between wanting a normal life and his responsibilities as Spider-Man, Peter's powers begin to fade. He gives up being Spider-Man and embraces civilian life, excelling at university and watching Mary Jane perform in The Importance of Being Earnest. Peter confesses his inadvertent role in Ben's death to May; though initially shocked, she forgives him. Despite his lost powers, Peter saves a child from a burning building, but another person dies. Believing he could have saved them both as Spider-Man, Peter concludes that his responsibilities as Spider-Man outweigh his personal happiness.
Octavius completes his new machine and confronts Harry, demanding the rare isotope tritium to power it. Harry agrees in exchange for Octavius bringing him Spider-Man, instructing Octavius to use Peter to find him. Realizing that she does not love John, Mary Jane meets with Peter at a café to confess her feelings, but he lies that he does not reciprocate. Octavius attacks the pair and kidnaps Mary Jane to coerce Peter into finding Spider-Man. Peter's powers fully return, and as Spider-Man, he fights Octavius atop a New York City Subway train. Octavius sabotages the controls of the train before retreating, forcing Peter to use all his strength to stop it from plunging into the New York Harbor. Despite the passengers' efforts to protect him, Octavius captures the weakened Peter and delivers him to Harry.
Harry unmasks Spider-Man, discovering Peter's true identity. Peter persuades Harry to help him save Mary Jane, leading him to Octavius's lair. The larger fusion reaction destabilizes again, and Peter unmasks himself to convince Octavius to resist the tentacles' influence and help him. Octavius, acknowledging his folly, sacrifices himself to drown the machine in the bay. Peter rescues Mary Jane, who now knows his secret, and admits that while he loves her, he cannot be with her. Meanwhile, Harry sees a vision in a mirror of Norman demanding vengeance. Harry refuses to hurt Peter and shatters the mirror, revealing a storeroom of Norman's abandoned Green Goblin equipment.
On her wedding day, Mary Jane abandons the ceremony and runs to Peter's apartment, telling him her choice to be with him despite the risk. Their kiss is interrupted by police sirens, and Mary Jane encourages him to go help as Spider-Man.