The film opens with John Nash arriving as a new graduate student at Princeton University. He is a recipient of the prestigious Carnegie Prize for mathematics. He meets his roommate Charles, a literature student, who soon becomes his best friend. He also meets a group of other promising math and science graduate students, Martin Hansen, Sol, and Bender, with whom he strikes up an awkward friendship. Nash admits to Charles that he is better with numbers than people, and that he strives for a truly original idea for his thesis paper. He is largely unsuccessful with the women at the local bar. However, the experience is what ultimately inspires his fruitful work in the concept of governing dynamics, a theory in mathematical economics. After the conclusion of Nash's studies as a student at Princeton, he accepts a prestigious appointment at the Massachusetts Institute of Technology (MIT), along with his friends Sol and Bender.
After observing this erratic behavior, Alicia informs a psychiatric hospital. Later, while giving a lecture, Nash realizes that he is being watched by a hostile group of people. Although he attempts to flee, he is forcibly sedated and sent to a psychiatric facility. Nash's internment seemingly confirms his belief that the Soviets were trying to extract information from him, and that being taken by the officials of a psychiatric facility was a kidnapping by Soviet agents. Alicia, desperate to help her husband, visits a drop-box and retrieves the never-opened "top secret" documents that Nash had delivered there. When confronted with this evidence, Nash is finally convinced that he has been hallucinating. The Department of Defense agent William Parcher and Nash's secret assignment to decode Soviet messages was in fact all a delusion. Even more surprisingly, Nash's friend Charles and his niece Marcee are also only products of Nash's mind.
After a painful series of insulin shock therapy sessions, Nash is released on the condition that he agrees to take antipsychotic medication. However, the drugs create negative side-effects that affect his relationship with his wife and, most dramatically, his intellect. Frustrated, Nash secretly stops taking his medication, triggering a relapse of his psychosis. While bathing his infant son, Nash becomes distracted and wanders off. Alicia barely manages to save their child from drowning. When she confronts Nash, he claims that his friend Charles was watching their son. Alicia runs to the phone to call the psychiatric hospital for emergency assistance. Charles, Marcee, and Parcher all appear to John and urge him to kill his wife rather than allow her to lock him up again. After Alicia flees the house in terror, Nash steps in front of her car to prevent her from leaving. After a moment, Nash states "She never gets old" as he observes that Marcee is the same age that she was when he first met her several years before. Only then does he accept that all three of these people are, in fact, part of his psychosis.
Caught between the intellectual paralysis of the antipsychotic drugs and his delusions, Nash and his wife decide to try to live with his abnormal condition schizophrenia. Nash attempts to ignore his hallucinations and not feed "his demons". Nash is growing older while working on his studies in the library of Princeton University. He still suffers hallucinations and periodically has to check if new people he meets are real, mentions taking newer medications, but is ultimately able to live with and largely ignore his psychotic experiences. Nash approaches his old friend and intellectual rival Martin Hansen, now head of the Princeton mathematics department, and receives permission to work out of the library and audit classes. He eventually begins teaching again. He is honored by his fellow professors for his achievement in mathematics, and goes on to win the Nobel Memorial Prize in Economics for his revolutionary work on game theory. Later, Nash and Alicia are about to leave the auditorium in Stockholm, when John sees Charles, Marcee and Parcher standing and smiling. Alicia asks John "What's wrong?" John replies "Nothing." With that, they both leave the auditorium.
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