A mine in the Ionian Sea accidentally sinks the spy ship St Georges, the ship was equipped with the ATAC communications device, and both the British and the Russians are seeking it. Marine archaeologist Sir Timothy Havelock's daughter Melina (Carole Bouquet) returns home and sees her parents murdered by Hector Gonzales, a Cuban hitman. James Bond (Roger Moore) is briefed by the Chief of Staff that the Havelocks were looking for the ATAC - Bond therefore travels to Madrid where Gonzales is staying, and witnesses Gonzales being paid by a ruthless-looking man. A crossbow bolt fired by Melina kills Gonzales, Bond helps them both escape, and Melina is set on revenge although Bond tries to dissuade her.

Bond identifies the paymaster as Emile Leopold Locque, a Belgian enforcer last seen in Cortina, northern Italy. Bond liases with the local agent, Ferrara, who introduces him to Ari Kristatos (Julian Glover), his contact among the Greek underworld. Kristatos tells Bond that Locque works for his rival, Colombo (Topol). Kristatos is sponsor to Bibi Dahl, a young ice skater, and Bond agrees to take her to the biathlon. Bond spots Melina, who was lured to Cortina by a fake telegram from 007, and saves her life before packing her off back to Corfu. Bond and Bibi watch Erich Kriegler, an East German champion, perform in the biathlon. Locque's thugs with the aid of Kriegler try to kill Bond in an extended ski chase, a further attempt on Bond’s life is made when he says goodbye to Bibi, after which he discovers Ferrara dead clutching a white dove, Colombo's sign.

Bond travels to Corfu and meets Kristatos, who points out Colombo to him. To find out more about Bond, Colombo's mistress, Countess Lisl, makes an unsubtle play for him to which he responds, but the next morning she is killed by Locque. Men wearing clothing with a white dove insignia save Bond, he awakes in Colombo's headquarters where the smuggler persuades him that Kristatos is really the enemy, and will prove it during a raid on a factory in Albania. This he does, and at the end Bond kills Locque.

Bond and Melina find the wreck of the St Georges and collect the ATAC; Kristatos’s men in specially equipped diving suits and a small mini-sub attack them. When they surface, they find Kristatos waiting. He relieves them of die ATAC, then heads to St Cyril's where he awaits collection by the Russians. Bond and Melina are keelhauled but they manage to cut themselves free and use a spare diving tank luckily left on the sea floor.

The Havelocks' parrot, Max, repeats the phrase 'ATAC to St Cyril's' to them, and, via Colombo, Bond discovers that this is a monastery at the top of a supposedly insurmountable mountain. Bond climbs it, and lets a basket down to allow Colombo, his men and Melina, to come up. Tension is rising in Kristatos's camp, as he tells Bibi and her trainer that they are going to Cuba. They therefore decide to leave, and help Bond and his party deal with Kristatos's guards. General Gogol arrives to collect the ATAC, but before he can get it Bond throws it off the mountain. He stops Melina from killing Kristatos, but Colombo deals with him anyway.