One afternoon after school, a local rich student named Clay (Zachary Ty Bryan), mocks Sean's 1971 Chevrolet Monte Carlo after seeing him talk to Clay's girlfriend, Cindy. Sean insults him about his "daddy's Viper", which causes Clay to throw a baseball to shatter the rear windshield of Sean's Monte Carlo. Sean challenges Clay to a street race, and Cindy offers herself as the prize.
The racetrack is set at a construction site. Sean drives through an alley to catch up, and he drives through an unfinished house. He passes Clay, who retaliates by trying to run him off the road, damaging his Viper in the process. Sean T-bones Clay and he crashes into a cement pipe, but Sean loses control and he flips over several times, totaling his car. Only Sean is charged for illegal street racing and property damage.
Because of his numerous brushes with the law in the past and tired of moving away all the time, Sean's mother sends him to Tokyo, to live with his dad, who is stationed there as a Navy officer. Upon arriving at his dad's home, he is warned by his dad not to stir up any trouble, and to not go anywhere near a car or he'll get deported back to the United States to go to jail.
At his new school, Sean meets Twinkie (Bow Wow), an extremely business-minded fellow American immigrant, who sells pre-owned goods around the school, and he drives a custom-designed, but odd Hulk-themed 2004 Volkswagen Touran van. Twinkie introduces Sean to the drift racing scene in Tokyo at the parking lot reserved for street racers and audience. On the lot, Sean has a verbal confrontation with Takashi (Brian Tee) – also known as "Drift King" or DK, because he was talking to DK's girlfriend, Neela (Nathalie Kelley), whom Sean met earlier in school.
After the confrontation, Takashi challenges Sean to a race, and Han Seul-Oh (Sung Kang), Takashi's business partner, lends him his Nissan Silvia S-15. Due to Sean's lack of knowledge on how to drift, he is defeated by Takashi's Nissan 350Z and his skills, and destroys the Silvia. Han warns him not to leave town. Sean is also confronted by his father, and Sean agrees again to stay away from racing. The next day, Han meets Sean after school with his Mazda RX7 (Veilside edition) and tells him that he must work for him to repay for the damage to his vehicle.
Han becomes Sean's friend and teaches him to drift, giving him a Mitsubishi Lancer Evolution IX (with the WRC tuning) to represent Han in future races. Han explains to him that he is helping him because Sean is the only one who is unafraid of Takashi (calling him DK's "kryptonite"). Sean leaves his dad's house and bunks with Han, and learns that Han arrived in Tokyo to prevent conviction also. Sean soon masters drifting and gains some reputation after racing Takashi's right-hand man, Morimoto, and winning against him. Sean soon asks Neela out on a date, and learns she is an outsider because, when her mom arrived in Tokyo, she worked as a barmaid. After she died, DK's grandparents took Neela in, and she hooked up with DK. DK beats up Sean the next day, telling him to stay away from Neela. Angry after seeing Sean's bruises, Neela leaves Takashi, moving into Han's garage.
One evening, Takashi's uncle Kamata (Sonny Chiba), a high-ranking member of the local yakuza, visits him and informs Takashi that the business is not meeting expectations, and Takashi realizes that Han has been nabbing some of his merchandise. Later that night, Takashi and Morimoto arrive at Han's garage and confront Han, Sean, and Neela about the goods, and Takashi pulls out his gun and theatens to shoot at Han. Twinkie causes a distraction, and Han, Sean and Neela use the moment to escape from the garage, with Morimoto and Takashi in close pursuit.
The driving continues throughout the Tokyo community, with Han in the lead, Sean and Neela behind him, with Morimoto and Takashi chasing them. Morimoto closes up and tries to T-bone Sean over the road, but he misses, avoiding traffic and collides with an oncoming driver, killing him instantly. Takashi continues along, and he manages to catch up with Sean, ramming him over the road. Han slams the brakes, switching the tables, with Sean heading on the front. Sean tries to help Han, but he finds himself in front of the large Shibuya square, honking to move the crowd, making a line to drift around the next corner. Takashi uses the moment and pulls an 180 spin, shooting on Han's windshield. Sean, noticing this, doesn't look at the traffic, and another driver rear-ends him. Meanwhile, Han pushes Takashi out of the road, and an oncoming car colides with him, flipping him over several times. Sean tries to help him, but Han's Mazda explodes, killing Han in the process.
Horrified by this event, Sean and Neela retreat and get back to where Sean's dad lives, but Takashi shows up and attacks Sean. Sean gets the upper hand, but Takashi pulls his gun on him. Sean's father shows up on the scene, forcing Takashi to leave with Neela. Sean's father demands that Sean return to the United States, but Sean insists on staying to make things right. With help from Twinkie, Sean goes to the Yakuza neighborhood and returns Kamata's stolen money. Sean then proposes a race against Takashi to determine who will leave Tokyo. Kamata agrees to the challenge, but it will take place on DK's mountain, because he has been the only one to make it down all the way.
The next day, Sean and Han's friends check Han's garage, but find that the police confiscated all of their cars, except for the Silva Sean crashed. Sean takes the 1967 Ford Mustang GT which his dad found, and remodels it with the help of Twinkie and the rest of the crew, using the engine components of Han's Silvia. The group restores the Mustang to the original shape.
On the mountain, Han's crew and Takashi's crew show up, gathering signal through local video calls to watch the race. Kamata shows up with Neela. One of Kamata's men gives the signal to start the race. Although Takashi takes the lead in front, Sean passes him a couple of times, to which Takashi responds by ramming him multiple times, trying to scare him off the mountain road. As the race progresses, Takashi almost totals his car trying to stop Sean from winning, but Sean gains the lead at the end of the race, managing to turn just before finish line as Takashi tries to ram him, sending Takashi off the cliff. As Takashi's crew pulls him from the totaled car, Sean crosses the finish line. Neela reunites with Sean, and Kamata lets them both go.
Months later, Sean is now the Drift King. One night, Twinkie informs Sean that he has a challenger to a race who has become well known around Asia. Sean accepts when Twinkie says the challenger knew Han, and that he was family to him. The challenger turns out to be none other than Dominic Toretto (Vin Diesel), who is driving "the Hammer", an old custom-built silver 1970 Plymouth Satellite. Sean, driving a Nissan Silvia like Han's - already knowing Dominic's reputation - tells him that this won't be a ten second race. Dominic responds with a smile and says that he has nothing but time. The film ends as both cars race off towards the first straight.