The film follows the rise to power of Daniel Plainview (Daniel Day Lewis) a hard working and charismatic oil prospector at the turn of the century. After hitting it big with a well, he moves down to southern California, looking for other prospects. One night a young man by the name of Eli Sunday (Paul Dano), comes to his office telling him he knows of a place with oil where he could drill. In exchange of 500 dollars, he gives Daniel the exact location of the place, where his family's ranch is, in Little Boston, California.

Daniel Plainview moves there, buys most of the land and brings in his workers. Eli Sunday also turns out to be a very religious person who demands money to build a church where he gives his sermons. The day after one of his workers dies in a freak accident, Daniel drops by the little church. Eli is giving a manic prayer, trying to get a ghost out of an old lady Mrs. Hunter. The prayer starts in a low tone and escalates into a manic "get out of here!!" as he tries to get the ghost out of the old lady.....as the ghost "leaves", Eli dances with her.