The film is set in the year 2019, over thirty years after a mysterious explosion destroyed most of Tokyo and subsequently started World War III 9 hours later. Neo-Tokyo has been built on an artificial island in Tokyo Bay, and is soon to host the Olympic Games in 2020. Despite its appearance as a glittering metropolis, it really under seige by a corrupt government, political unrest, and violence and crime in the streets. One gang of teenage bikers called the Capsules, is led by smug 16-year-old delinquent Shotaro Kaneda, engage the Clowns, a rival gang, in a street fight. While pursuing two Clowns, Kaneda's best friend, Tetsuo Shima, has his bike inexpliably explode when he finds a boy with the face of an old man blocking his path. The boy, Takashi, had been previously set free from a government facility with help from the terrorist Resistance. Kaneda's gang arrives to see Army soldiers, led by Colonel Shikishima, collect Takashi and the injured Tetsuo. The Capsules are arrested at the scene.