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Ellsworth "Bumpy" Johnson (Clarence Williams III), a disciplined and intelligent gangster, runs much of Harlem and imparts his wisdom onto his former driver turned right-hand man, Frank Lucas (Denzel Washington). Johnson dies of a heart attack in 1968, at an electronics store. Frank dislikes the new, flashy gangsters and decides to take control. To gain money and power, he travels to Bangkok, Thailand, and with the help of his "cousin" who is an Army Staff NCO, strikes a deal with a Chinese nationalist general in the Golden Triangle of Southeast Asia, who supplies him with pure heroin. Starting with a first shipment of 100 kilograms, Frank has the drugs transported back to America via military service planes. His final shipment comprises two tons hidden in the coffins of seven dead U.S. soldiers from the Vietnam War.


Meanwhile, Newark Police Department detective Richie Roberts (Russell Crowe) is juggling a failing marriage, late-night law school classes, and his police career. When Richie and his partner, Javier Rivera, discover nearly $1 million in unmarked bills in a car, Richie resists temptation and turns the money in. His rare honesty makes him a hated member of his precinct, causing his partner to be exiled from the force, while Richie's rampant womanizing behavior and undercover double life leads his wife to seek a divorce and custody of their son. After his exiled partner dies from overdosing on "Blue Magic", a relatively new and powerful type of heroin being sold for less money than its competition, Richie's honesty catches him a break when his superior Captain Lou Toback (Ted Levine) puts him in charge of a newly created task force to stop major drug trafficking in Essex County, New Jersey by going after the actual supplier, rather than the middle-men. Richie handpicks honest cops and gets to work on finding who is supplying Blue Magic.


Frank's unique drug supply enables him to sell pure heroin, as contrasted with the adulterated product sold by his rivals, and at a lower price, because he cut out the middle men in the supply chain. He creates a brand “Blue Magic” and with an effective monopoly on quality product, Frank quickly makes a fortune and buys several nightclubs and apartments. He moves his family from North Carolina to New Jersey, where he purchases a large estate for his humble mother. His five brothers are enlisted as his lieutenants in the drug trade – forming “The Country Boys” who work together to traffic and sell dope on Harlem streets. During his rise, Frank meets and falls in love with Eva, a Puerto Rican beauty queen. Through his discipline, organization, and willingness to kill those in his way, Frank quickly rises to the top of the Harlem drug and crime scene.


As Frank's business prospers, he makes a point of operating quietly and dressing with a modest conservatism both as a sign of strength and to avoid attracting the attention of the law. However, Frank disregards this habit for his wife for one ostentatious night out, attending the Fight of the Century between Muhammad Ali and Joe Frazier, in a gaudy chinchilla fur coat and hat, along with a ringside seat. As it happens, Roberts is on duty observing the event and sees this unknown, but obviously wealthy person associating with high-level criminals, as well as having better seats than the Italian Mafia. Roberts becomes suspicious, and he begins to investigate this unknown (to him) figure in New York organized crime.


Even as Frank realizes he has exposed himself to police scrutiny, he must make deals with the Mafia, in this case Lucchese crime family Mob boss Dominic Cattano (Armand Assante), and fend off corrupt NYPD detectives, such as Det. Trupo (Josh Brolin), who attempt to extort and threaten him. Trupo's dislike of Frank is capped when his prized Shelby Mustang is bombed before his eyes. Frank must also contend with local crime figure Nicky Barnes (Cuba Gooding, Jr.), who is taking some of Frank's product, diluting it himself, and selling it under Frank's "Blue Magic" brand name. Unidentified assassins try to kill Frank’s wife, further destabilizing him and threatening his marriage. Things take a turn for the worse when Frank sees the U.S. military vacating Vietnam, Fall of Saigon, which in turn cuts off his primary heroin transportation. His Kuomintang supplier sympathetically tells him "Quitting while you are ahead...is not the same as quitting."

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