Selected from birth and officially adopted by a television studio following an unwanted pregnancy, Truman Burbank is the unsuspecting star of The Truman Show, a reality television program filmed 24/7 through thousands of hidden cameras and broadcast worldwide. Christof, the show's creator and executive producer, seeks to capture Truman's authentic emotions and give audiences a relatable everyman.

Truman's hometown, Seahaven Island, is set inside an enormous dome so large as to be visible from space, populated by crew members and actors who advertise products to both Truman and the audience to generate revenue for the show. The elaborate set allows Christof to control almost every aspect of Truman's life, including the weather. To prevent Truman from discovering the truth, Christof orchestrates scenarios that curtail his desire for exploration, such as the "death" of his father in a sea storm to instill thalassophobia, and constantly broadcasts messages about the dangers of traveling and the virtues of staying home.

During his college years, Truman, though written to fall in love with and marry fellow student Meryl, develops feelings for Sylvia, an extra. Although Sylvia is fired from the show before she can disclose the truth to Truman, he secretly continues to dream of a life with her outside of his marriage to Meryl and hopes to travel to Fiji, where he is led to believe Sylvia moved. In the real world, Sylvia joins "Free Truman", an activist group that aims to cancel the show and have Truman released.

As the show approaches its 30th anniversary, Truman begins to notice unusual occurrences around him, such as a broken spotlight (labelled Sirius) falling from the sky, a column of rain following only him, a malfunctioning radio channel precisely describing his movements, and the reappearance of his father (who is rushed away by crew members before Truman can confront him). Truman begins questioning his life and realizes that the city somehow revolves around him.

One day, Truman takes Meryl on a surprise road trip in an attempt to leave Seahaven Island. Increasingly implausible disasters block their way. The last disaster is a nuclear plant leak, which closes the road. A police officer whom Truman does not know addresses him by name, and Truman's suspicion is renewed. Truman quickly leaves the car and tries to continue on foot. He is stopped by people in protective gear.

The next scene has Meryl thanking the police officers who brought them home. Truman questions Meryl's intentions. When Meryl attempts to change the topic by advertising a product, Truman deduces that she is involved in the conspiracy. Meryl tries to leave and backs into the kitchen with Truman following her. Meryl grabs a sharp kitchen utensil and waves it at Truman. Shocked at her behavior, Truman tries to disarm her; Meryl breaks character and calls for help. The front door starts to open, and it's Truman's best friend making a surprised visit. Meryl runs to him. The friend reassures them everything will be okay. Meryl is removed from the show.

Hoping to bring Truman back to a controllable state, Christof properly reintroduces his father to the show under the guise of him having developed amnesia after the boating accident. The show regains its ratings, and Truman seems to return to his routines, though he begins sleeping in his basement. Christof sends Truman's best friend Marlon to visit and discovers that Truman has secretly disappeared through a makeshift tunnel in the basement. Christof temporarily suspends the broadcast for the first time in its history, leading to record viewing numbers.

Christof orders a citywide search for Truman and is soon forced to break the production's day-night cycle to optimize the search. Truman is found sailing away from Seahaven, having conquered his fear of water. Christof resumes the transmission and creates a violent storm in an attempt to capsize Truman's boat. Truman nearly drowns, but his spirit remains unbroken, and he continues to sail until his boat strikes the wall of the dome.

Initially horrified, Truman looks around and finds a staircase leading to an exit door. As he contemplates leaving, Christof speaks to him directly through a speaker system, encouraging him to stay by claiming that there is no more truth in the real world than his artificial one, in which he has nothing to fear. After a moment of reflection, Truman utters his catchphrase: "In case I don't see you... good afternoon, good evening, and good night", bows to his audience, and exits. Viewers around the world celebrate Truman's escape, and Sylvia races to greet him. Christof's supervisors end the program with a shot of the open exit door as viewers decide to see what else is on television.