In the near future, Paul and Audrey Safranek are a married couple in Omaha with financial issues. At a high school reunion, they encounter Dave and Carol Johnson, who have “downsized,” an irreversible process invented 15 years earlier that involves shrinking humans to a height of five inches. While the inventors advocate that downsizing is environmentally friendly through the reduction of waste, Dave argues its benefits extend far beyond that, and improve one’s life through the increase in value of their money. Exploring the possibilities of downsizing, Paul and Audrey agree to undergo the process and move in to Leisureland, one of the most popular communities for small individuals. After undergoing downsizing, Paul receives a call from Audrey, saying that she was unable to go through the procedure and opting out at the last minute, and will be leaving him.
One year later, Paul finalizes the divorce with Audrey, and settles in to his new apartment. Although Paul had anticipated a life of relative ease, he works as a telemarketer for Lands’ End. While attending a birthday party, Paul has a discussion with Dave, and says that he regrets his decision to downsize. Soon after, Paul breaks up with his girlfriend, and attends a party hosted by his neighbor, Dusan. The next morning, Paul notices that one of Dusan’s housecleaners is Ngoc Lan Tran, a Vietnamese political activist who was jailed and downsized against her will. Lan Tran was the sole survivor of a human smuggling attempt to the United States in a television box, and had her leg amputated upon arrival. Attempting to assist Lan Tran with her prosthetic leg, Paul returns to her house in the slums outside of the walls of Leisureland. After assisting Lan Tran’s dying friend, Paul attempts to repair Lan Tran’s prosthetic leg, only to break it and make her unable to work. In return, Paul works for Lan Tran’s cleaning service, where he also assists in gathering food around to the city that Lan Tran distributes throughout the slums. Dusan attempts to release Paul from his obligation by taking him to Norway, the site of the first small community, with his friend Joris Konrad, but Lan Tran argues to come along. Lan Tran had received international attention after her arrival in the United States, including personal correspondence from the inventor of downsizing, Dr. Jørgen Asbjørnsen, who had previously invited her to Norway.
While traveling in a fjord, Paul’s boat encounters Dr. Asbjørnsen and his wife, Anne-Helene. Dr. Asbjørnsen announces that humanity is doomed, as the positive feedback of Arctic methane emissions is unable to be stopped, and will result in the eventual extinction of the human race. Arriving in the first colony, Paul is shown that Dr. Asbjørnsen planned for such a contingency with the creation of a large vault inside a mountain to insulate the colony and preserve humanity in the event of an extinction. Paul is excited to enter the vault, and asks Lan Tran to join him. She rejects his offer, saying that he does not need to enter the vault, and can do good in their community by returning. Paul enters the vault, but changes his mind and leaves as the door is closing, choosing to return with Lan Tran, Dusan, and Konrad. Having returned to Leisureland, Paul assists Lan Tran in her duties of provided needed aid and supplies to the people of the slums.