Jaws is set in the fictional town of Amity, a small, seaside resort located on the south shore of Long Island, halfway between Bridgehampton and East Hampton. One night, after making love on the beach, a young woman named Christine Watkins skinny dips alone in the ocean where she is attacked and killed by a massive great white shark. After she is reported missing, her partially eaten remains are found washed up on the beach. When the coroner determines she was was the victim of a shark attack, Amity Police chief Martin Brody orders the beaches closed, but mayor Larry Vaughan and the town's selectmen overrule him out of fear for damage to summer tourism, Amity's main source of commerce. With the collusion of Harry Meadows, editor of the local newspaper, news of the attack is kept quiet.

A few days later, the shark kills a young boy and an elderly man within half an hour of each other. Amity hires Ben Gardner, a local fisherman to kill the shark but he disappears at sea. Brody and his deputy, Leonard Hendricks discover Gardner's deserted boat anchored off-shore, covered with large bite holes, one of which has a large shark tooth stuck in it. The boy's mother and Gardner's widow both berate Brody for causing their deaths by not closing the beaches after they learn of the attack on Chrissie Watkins. Brody, struggling with guilt, orders the beaches closed and has Meadows investigate the Mayor's business contacts to find out why he is so determined to keep them open. Meadows soon discovers Vaughan has ties to the Mafia, who are pressuring the mayor to keep the beaches open in order to protect the value of Amity's real estate in which the Mafia has invested a great deal of money; Vaughan, heavily in debt to the mob, stands to lose everything if Amity's home market value should fall. Meadows also recruits Matt Hooper, a young ichthyologist from the Woods Hole Oceanographic Institution for advice on how to deal with the shark. When Brody shows Hooper the tooth found on Gardner's boat, he determines it to be the tooth of an unusually large great white shark.

Meanwhile, Brody's wife, Ellen is lamenting the loss of her youth and the affluent lifestyle she had before marrying Brody and having children. Coincidentally, when Ellen was a teenager, she dated Hooper's older brother a few years before she met Brody. Ellen becomes fixated on Hooper as a link to the past she desperately longs for. After Hooper attends a dinner party at the Brody's, Ellen, intent on recapturing her juvenescence and joie de vivre, decides to seduce him. The following morning, she telephones Hooper at his hotel and invites him to meet her for lunch at a restaurant several miles away from Amity. During lunch, the two have several drinks, begin flirting and after a sexually charged conversation, go to a motel. Unable to reach Hooper nor Ellen by phone that afternoon, Brody begins to suspect they have had a liaison and he becomes obsessed and tormented by the thought.

After a week and no further attacks or sightings of the shark, the Mayor convinces Brody to reopen the beaches. By this time, news of the shark attacks have spread; tourists and reporters flock to Amity for a glimpse of the killer shark. Brody sets up patrols along the beaches to watch for the fish. After a teenage boy narrowly escapes another attack near the shore, Brody again closes the beaches and convinces the town's selectmen to hire Quint, an eccentric, crusty professional shark hunter, to find and kill the shark. Brody and Hooper set out with Quint on his vessel, the Orca and the tension between the three men soon escalates. Quint dismisses Hooper as a spoiled, rich kid; Hooper is angry over Quint's methods when he disembowels a blue shark and uses an illegally caught unborn baby dolphin as bait. Brody's suspicions about Hooper and Ellen increase, as more circumstantial evidence points to a possible tryst between them. A heated argument ensues with Brody strangling Hooper for several seconds.

The first two days at sea are unproductive, but the three come in contact with the shark by the end of the second day. Upon seeing the fish for the first time and estimating the shark to be at least 20 ft (6.1 m) in length and weighing in at roughly 5,000 lb (2,300 kg), Hooper is visibly excited and in awe at the size of it.

Larry Vaughan visits the Brody house and informs Ellen that he and his wife are moving away from Amity. Vaughan speculates on the life he might have led had he married Ellen. After he leaves, their conversation makes Ellen reflect on her life and she realizes her mistake over her thoughts of missing the life she had before marrying Brody. When Brody returns home, Ellen gives him an unusually long and tight embrace.

On the third day, Hooper wants to bring along a shark-proof cage, in an attempt to kill the fish with a bang stick. Initially, Quint refuses to bring the cage on board, considering it a suicidal idea, but he relents after Hooper pays him $100. After several unsuccessful attempts by Quint to harpoon the shark, Hooper goes underwater in the shark cage. The shark attacks the cage, something Hooper did not expect. After destroying the cage, the shark kills and eats Hooper. Brody is horrified and is convinced the shark can't be killed. He tells Quint that after Hooper's death the town likely will no longer pay him, but Quint is now determined to kill the shark regardless of the money.

Quint and Brody return to sea the next day. After the shark attacks the Orca and Quint harpoons it several more times, it leaps out of the water and onto the stern of the boat, tearing a huge hole in the aft section. As the Orca is sinking, Quint plunges another harpoon into the shark's belly; however, as the fish settles back into the water, Quint's foot becomes entangled in the rope attached to the harpoon, and he is pulled underwater and drowns. Brody, now floating on a seat cushion, watches as the shark slowly swims toward him; he closes his eyes and prepares for death. Just as the shark reaches Brody, it succumbs to its wounds and dies before it can attack. Slowly, the shark begins to sink. The lone survivor of the ordeal, Brody watches as the dead shark disappears into the depths and then he begins to paddle back to shore on his makeshift float.