Watchmen is set in an alternate history during the 1980s. The United States is about to enter a nuclear war with the Soviet Union. Earlier, superheroes helped the United States win the Vietnam War. Now, superheroes work for the government (Doctor Manhattan, The Comedian), are retired (Nite Owl, Adrian Veidt/Ozymandias, Silk Spectre), or work illegally (Rorschach).

After The Comedian is murdered, the other superheroes work together to figure out the killer's identity. In the beginning, Rorschach believes other superheroes are in danger and warns them. Soon after, Doctor Manhattan leaves Earth for Mars, creating more turmoil. Nite Owl starts to believe Rorschach. Together they discover Adrian Veidt has murdered The Comedian and framed Doctor Manhattan to protect his plan. Veidt says he wants to fake an alien invasion to avoid an atomic war.

By this time, Veidt's plan has already occurred. Many New York City residents have been killed. Doctor Manhattan kills Rorschach, the only superhero who wanted to reveal Veidt's secret. All living superheroes have now retired. The world is unified.