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 Paul 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 goes there to scout the location and senses there is oil indeed to be found. He buys up land and brings his crew. He buys the land of Paul Sunday's family which includes three daughters and Eli, Paul's twin brother. Eli Sunday turns out to be a religious freak and an antagonism develops between him and Daniel and Eli makes various requests to build his church. Eventually they find large quantities of oil and when Eli walks to Daniel and demands money, Daniel assaults him, making him eat mud. He also promises he will kill him one day and that comes true in the very last scene of the film, which takes place in Daniel Plainview's mansion, many years later.

In this scene Eli Sunday, now an evangelist preacher who is in dire straights, comes to Daniel to ask for money in exchange of him letting him drill in a farm which belonged to an old man who just died and was part of his congregation. Daniel accepts but on the condition that Eli shout to him that "he is a false propher and God is a superstition". After he does, Daniel tells him that land has already been drilled.....owning all the land around it, he obviously already sucked up all the oil. He scolds him, he tells him "he is not the chosen prophet" and that the smart one was his brother Paul who came to him in the first place. Then mocks him with the analogy of the "milkshake" to explain to him what drainage means and how he sucked up all the oil in that land. Then he kills him....