John "Eraser" Kruger (Arnold Schwarzenegger) is a U.S. Marshal who works for the Federal Witness Security Protection Program (WITSEC). John is assigned to protect Dr. Lee Cullen (Vanessa L. Williams), a scientist who works for Cyrez Corporation, a company that creates and manufactures weapons for the military. Lee has come across plans in which Cyrez plans to sell a top secret electronic pulse rifle to terrorist Sergei Ivanovich Petrofsky (Olek Krupa). With its unparalleled firepower, the sale of such weapons to the wrong hands would tip over the balance of power.
The man behind the scheme, William Donahue (James Cromwell) wants Lee dead, because without Lee's testimony, there is no case against Cyrez. After Donahue commits suicide to escape punishment, John takes Lee to New York City to hide her, then John and his mentor, fellow marshal Robert DeGuerin (James Caan), try to locate a witness. But Deguerin kills the witness they are looking for, indicating that Deguerin is Donahue's U.S. Marshal mole in the scam. Even Undersecretary of Defense Daniel Harper (Andy Romano) is in on it.
Deguerin kidnaps Lee, and with the help of Johnny Casteleone (Robert Pastorelli), a man whose life John once saved, John rescues Lee and prevents the railgun shipment. After a hearing for Deguerin and his fellow conspirators a few weeks later, and with the implication that under civil law jurisdiction a conviction and sentence of the culprits will not be possible, John eliminates Deguerin and the conspirators, "erasing" them thoroughly in an arranged train accident.