The night before their flight to Paris for the Christmas holiday, the McCallister family gathers at the Chicago suburb home of Peter and Kate McCallister. Their eight-year-old son Kevin is ridiculed by his siblings and cousins. After an argument with his older brother Buzz, Kevin is sent to the third floor of the house, where he wishes his family would disappear. During the night, a power outage resets the alarm clocks and causes the family to oversleep. In the confusion and rush to reach their flight on time, Kevin is left behind and the family does not realize it until they are already airborne. Once in Paris, Peter and Kate desperately try to book a flight home, but find all the flights booked for the next 2 days. The clerks put Kate on standby for any possible seat opening. The rest of the family go to their relative's home in Paris.
Meanwhile, Kevin wakes up to find the house empty and is overjoyed with his new freedom. He practices shooting with Buzz's BB gun, jumps on the bed, watches a gangster film, and eats a large serving of junk food, but accidentally wrecks Buzz's room. The Chicago Police Department arrive to check on him but are unable to find him and consider his parents' call a hoax. Kevin also deals with his fear of his next door neighbor "Old Man" Marley, who is rumored to have murdered his family many years earlier, and the The Wet Bandits, Harry and Marv, criminals named for Marv's tendency to intentionally flood the homes they rob. The pair are robbing the area's vacant homes and have targeted Kevin's. Kevin keeps the pair at bay by tricking them into thinking the house is still inhabited, but they eventually realize Kevin is alone.
Kate gets a flight to the USA, but ends up in Pennsylvania. She tries to book a flight to Chicago but they are again all booked. Kate refuses to accept the situation, and she is overheard by Gus Polinski, the lead member of a traveling polka band, who offers to let her travel with them to Chicago on their way to Milwaukee. Kate happily accepts.
On Christmas Eve, Kevin overhears Harry and Marv discussing plans for breaking into his house that night. Kevin goes to church and watches a choir perform. Marley sits beside Kevin and the pair talk; he learns that Marley is actually a nice person and the rumors about him are false. He tells Kevin he is watching the choir because his granddaughter is in it, and he never gets to see her because he and his son have not spoken in years after they had an argument. Kevin advises him to reconcile with his son.
Kevin returns home and rigs the building with various booby traps. Harry and Marv break in, triggering various traps and suffering burns, impalement and a lost tooth. While the pair close in on Kevin, he calls the police and escapes the house into a neighboring vacant home. Harry and Marv manage to catch him and discuss how they will get their revenge. Marley sneaks up behind the pair and knocks them out with a snow shovel. Shortly after, Harry and Marv are arrested, and tied to the multiple other robberies because of Marv's flooding habit.
On Christmas Day, Kevin is disappointed to find that his family is still gone. He then hears Kate enter the house and call for him; the pair hug. Immediately after, the rest of the McCallisters arrive, having flown directly from Paris to Chicago. Kevin keeps silent about his encounter with Harry and Marv, although Peter finds Harry's missing gold tooth. Kevin and Buzz forgive each other for their earlier argument. Kevin then observes Marley reuniting with his son and his family. Marley notices Kevin and the pair acknowledge each other. Buzz suddenly calls out, "Kevin, what did you do to my room?", at which point Kevin runs off.