It is late 12th century England and Robin Longstride (Russell Crowe) is a common archer in the Third Crusade. Following the death of Richard the Lionheart in battle, Robin and three other common soldiers attempt to return to their homeland, having spent ten years fighting abroad. Along the way they come across an ambush of the King's guard by Sir Godfrey (Mark Strong), an English Knight with French lineage and allegiance. The King of France had ordered Sir Godfrey to assassinate Richard. Having discovered the King is already slain Sir Godfrey is chased off by the arrival of Robin and his companions. Aiming to return to England safely and richer in pocket than they left it, Robin and his men steal the armour of the slain Knights and head for the English ships on the coast under the guise of noblemen. Before leaving the scene of slaughter Robin promises a dying Knight, Sir Robert Loxley, to return a sword to the man's father in Nottingham.

Upon arrival in England, Robin (who has assumed the identity of Loxley) is chosen to inform the Royal family of the King's death and witnesses the crowning of King John (Oscar Isaac), who is the younger brother of the recently-deceased Richard. The arrogant King John shows no remorse to his poor Kingdom and demands harsh taxes to be collected, sending Sir Godfrey off to the North with the task of raising revenue. Unbeknownst to King John, Sir Godfrey is an agent of the French King and uses this Royal Decree to stir up enough unrest to cause Civil War in England.

Robin and his companions head to Nottingham, where Loxley's father, Walter (Max von Sydow) asks him to continue impersonating his son, in order to prevent the family lands being taken by the crown. Loxley's widow, Lady Marion (Cate Blanchett), is initially distrustful of Robin, but soon warms to him when he recovers taxed grain for the townsfolk to plant.

Meanwhile, Godfrey's actions have stirred up the northern Barons, who march to meet King John, and demand the signing of a charter of rights. Having realized Godfrey's deception, and knowing he must reunite his people in order to meet an imminent French invasion, the King agrees. A battle follows shortly where Godfrey's men are interrupted while ransacking Nottingham, and chased off by Robin and the northern Barons.

The film climaxes with an invasion on England's south coast by the French, who are met as they land by the English army. The English are victorious in the ensuing battle, during which Robin slays Godfrey with a well-placed arrow from a long distance. In the final scenes, King John reneges on his word to sign the Magna Carta, and declares Robin to be an outlaw. Thus, Robin moves to Sherwood Forest to form what will become the Merry Men of Sherwood Forest and win the accolade of Robin of the Hood (Robin Hood), becoming a legendary figure in English folklore.