Shaun (Simon Pegg) is a 29-year-old salesman whose life has no direction. His younger colleagues at work show him no respect and he has a rocky relationship with his stepfather, Phillip (Bill Nighy). He also has a tense relationship with his housemate, Pete (Peter Serafinowicz), because of Ed (Nick Frost), Shaun's crude best friend who lives on their couch and deals marijuana. His girlfriend, Liz (Kate Ashfield), is unsatisfied with their social life, because it consists primarily of spending every evening at the Winchester, Shaun's favourite pub, as well as the fact that they never do anything alone together - Shaun always brings Ed and she has to bring her flatmates, David (Dylan Moran) and Dianne (Lucy Davis).
Having a miserable day, Shaun is berated by Pete for forgetting to shut the house door AGAIN and to get rid of Ed since he has become nothing more than a hinderance to them; Pete even wonder if Ed still has a home to go back to. Shaun tries to get Ed to be a better person, but cannot find the words; Pete tries gentle encouragement instead of yelling, getting a half-hearted agreement from Ed to clean up. At work, Shaun runs into Phillip, who says to pay a visit to his mother, Barbara (Penelope Wilton), and bring her flowers to make up for forgetting Mother's Day. Shaun goes to the flower shop, requesting a card with the flowers; he notices someone in a park picking up a pigeon, but cannot think more about it because the order is ready. He goes home, ready to see his mother; however, Ed tells him Liz called about their restaurant reservation to celebrate their anniversary. Finding there are no more tables, Shaun calls Liz. When she asks what the plan is then, prompting Shaun suggest the Winchester. Liz promptly breaks up with Shaun because of this.
Despite trying to salvage their relationship, Shaun is left speechless when Liz points out several promises that he's broken. He decides to drown his sorrows with Ed at the Winchester; seeing Shaun needs something to take his mind off Liz, Ed asks the owner for a Lock Up, encouraging Shaun to keep drinking until the pain is gone. Ed makes several implications about the other patrons, suggesting the owner is part of the mafia and the gun above the bar is real. Someone pounds on the door outside, groaning. They leave, seeing a couple kissing near the door; however, as they walk away it's revealed to be a zombie eating someone. Shaun and Ed sing, hearing someone groan in rhythm of them; however, they pay the approaching zombie no mind and go home. They play records all night, only to have Pete confront them. Pete, suffering a headache after being mugged and bitten by "some crackheads", berates Shaun and tells him to sort his life out. Shaun resolves to do so the next morning.
Waking up, Shaun heads to the store for a drink, being too hungover to notice all the obvious signs that something terrible has happened. He leaves under the price for the drink behind for the clerk, ignoring a homeless zombie walking towards him. Shaun watches television, humorously flipping through channels that continue on a message that an apocalyptic uprising of zombies has occurred. Ed points out there's a girl in their garden; she appears drunk to them, but is a zombie. Reading her nametag "Mary", Shaun tries holding her off when Mary pounces on him; Ed goes to get a camera instead of helping. Once Shaun's pleas have become annoying enough, Ed tosses Mary away, only for her to get impaled by a pipe. Realizing the truth, they try going back in the house, only to find a obese zombie behind them. Successfully getting inside, Ed and Shaun watch reports on TV, which explain that everyone must barricade their homes and lock the doors. Realizing they never do, both are surprised by a zombified groom; Ed kills it by smashing an ashtray in its head.
Hearing that zombies can be killed by destroying their heads, Shaun and Ed collect sharp and blunt objects, tossing them at the remaining zombies in the yard; however, their aim is rather poor. They toss records next, succeeding in landing a hit. Tired of the fruitless efforts, Shaun crashes through the shed door; he grabs a cricket bat while Ed gets a shovel. They kill the zombies before heading back in to watch the news. Shaun calls his mother to learn if she's safe; zombies attacked, biting his stepfather. Shaun is more than okay with this news, deciding to go get her. He and Ed discuss where to go to keep safe after killing Phillip and saving his mother; however, Ed is against staying at Liz's since he wants to know where the exits are and to smoke freely. They decide that the safest place they know is the Winchester. They discover that Pete is still in the house and is now a zombie, but manage to escape in Pete's car.
Arriving, Ed is impressed by Phillip's Jaguar; he tricks Shaun into letting him stay outside, so he can crash Pete's car to allow himself the luxury of driving a Jaguar -a brilliant plan by an idiot. Shaun sneaks up to Phillip, whose watching TV; however, he hasn't turned. After a frustrating time of trying to get his mother to leave with him and leave Phil, Shaun decides to take them both. They greet Ed, who Shaun is angry with for somehow being able to crash Pete's crash despite being parked. Unfortunately, zombified clubbers attack and bite Phillip, making the chance of zombification 100% positive for him. Despite Phillip valuing Barbara's safety over his own life, Shaun decides to take Phil with despite the approaching threat of his death and zombifying. They head to Liz, Dianne and David's flat. Shaun climbs up to it to avoid zombies; he eventually manages to convince them to leave.
Before they make it to the Winchester, Phillip dies of his bite, after he manages to make peace with Shaun. Forced to abandon the car, they set off on foot, bumping into Yvonne, a close friend of Shaun's, and her own band of survivors. Discovering that the path is infested with zombies, they devise a plan to sneak by, pretending to be zombies, with the help of Dianne, who is an aspiring actress. Ed and Shaun get into an argument and the zombies, after watching the commotion, realize they are not dead and approach. David smashes the window with a dustbin and, while Shaun distracts the zombies, everyone takes refuge inside the pub. Shaun joins them after giving the zombies the slip. After several hours, the zombies return. Ed inadvertently gives away their position when he wins on the fruit machine and the zombies converge on the pub. At that moment, the pub's landlords, also zombies, arrive and attack them. Ed manages to get the Winchester rifle above the bar working and they use it to fend off the zombies breaking in. However, Barbara reveals a bite wound she picked up along the way and subsequently dies. Realizing she is about to become a zombie, David points the rifle at her, only to meet resistance from Shaun and Ed, and in the ensuing confrontation, Dianne reveals that she is aware that David loves Liz and not her. After Barbara returns as a zombie, Shaun shoots her, and punches David.
David grabs the rifle and attempts to shoot Shaun, but discovers that the rifle is out of ammo. Before anyone can react to his attempt to kill Shaun, David angrily storms to the door. Dianne talks him away from it, and David begins to apologize to Shaun. At that moment, the zombies break through a window and drag him out, disemboweling and dismembering him. Frantic, Dianne unbolts the door to rescue David, exposing Shaun, Liz and Ed to the zombies. Ed prepares a Molotov cocktail to fend them off, but Pete arrives and bites him. He manages to get over the bar and Shaun uses the cocktail to ignite the bar. They escape into the cellar. Finding themselves cornered, they contemplate suicide, but discover a service hatch. Shaun and Liz escape through the hatch, and Ed, now mortally wounded from the ensuing zombie attack, stays behind with a cigarette and the rifle. Back on the street, Shaun and Liz prepare to fight the zombies once more, but at that moment, the British Army arrives and they are rescued. Yvonne, who has also survived, shows up and tells Shaun and Liz to follow her. They approach the safety of the trucks, reconciled. Six months after the outbreak, all of the uninfected have returned to daily life, and the remaining zombies, retaining their instincts, are used as cheap labour and entertainment. Liz and Shaun have moved in together in Shaun's house, and Shaun is keeping Ed tethered in the shed and playing TimeSplitters 2.