"Watchmen" is set in an alternate 1985 America in which costumed superheroes are part of the fabric of everyday society, and the "Doomsday Clock" - which charts the USA's tension with the Soviet Union - is permanently set at five minutes to midnight. When one of his former colleagues is murdered, the washed up but no less determined masked vigilante Rorschach sets out to uncover a plot to kill and discredit all past and present superheroes. As he reconnects with his former crime-fighting legion - a ragtag group of retired superheroes, only one of whom has true powers - Rorschach glimpses a wide-ranging and disturbing conspiracy with links to their shared past and catastrophic consequences for the future. Their mission is to watch over humanity... but who is watching the Watchmen?"

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A man sits alone in his apartment watching a TV news program discuss a potential nuclear war with Russia. A tall slim figure breaks into the room. The two start to fight, after trading blows the newcomer is able to push the resident out of his window. He falls to the ground with his smiley face button.

The opening credits show historical pictures. Masked, costumed vigilantes fight crime in America. In the 1930s and '40s, the vigilantes formed a group called the Minutemen to "finish what the law couldn't." The original lineup often suffered early and violent deaths in action, or became suicides, or were arrested for breaking the law themselves, or in one case was committed to an asylum. Decades later, a second generation of "superheroes" attempts to form a team as well, called the Watchmen. Dr. Jon Osterman (Doctor Manhattan), Laurie Jupiter (Silk Spectre), Daniel Dreiberg (Nite Owl), and Adrian Veidt (Ozymandias) have a group photo taken. By the 1980s public opinion goes against superheroes and they are forced to stop.

It is Oct 12, 1985, investigating the murder of the man who fell to his death, Rorschach enters the crime scene apartment and discovers the uniform, weapons and memorablia of the Comedian.

Daniel Dreiburg is at the home of Hollis Mason, the original Night Owl. The two have regular meetings and talk about old times. Daniel leaves in the rain and goes home. Rohrshach is in his kitchen. They discuss the Comedian's death and Rohrshach's vigilante activities.

Daniel goes to see the rich Adrian Veidt. He is being interviewed and talks about developing renewable energy sources. Daniel warns him someone may be after the Watchmen, but Adrian is nonplussed.

The next evening Rorshcach breaks into the the US Army Rockefeller Military Research Center to warn Manhattan and Silk Spectre who live there in private quarters. Manhattan says he cannot see the future due to temporal interference caused by nuclear war tachions moving through time. After zapping Rorshach away Jon mentions he has been working with Adrian to solve the energy crisis. Jon knows Laurie will be going out to dinner with Daniel later.

Laurie and Daniel have dinner and talk about the old days. Laurie confides Jon is becoming more remote.

At the cemetary the Comedian gets a military honor guard funeral.

Laurie is zapped over to her mother's home. The older woman is drinking margaritas and reminiscing about her old Minuteman days. In a flashback the original Minutemen are seen having a group photo in a wood-panelled club. Sally goes to the billiards room to change clothes and the Comedian enters. Sally attempts to push him away but the Comedian punches her and is ready to rape her when the other Minutemen interrupt, the Comedian is beaten. Sally concludes with a cryptic observation about Eddie Blake.

Back at the rainy cemetary Jon and Daniel are there. Jon remembers back in Viet Nam the Comedian and Dr. Manhattan were helping the US fight the war. In a bar as the war is over, a Vietnamese woman confronts the Comedian and tells him she is pregnant. The Comedian shoots and kills the woman, then he berates Manhattan for not stopping him, proving that Jon doesn't really care about humanity.

Adrian also watches the coffin being laid to rest and recalls a Watchmen group meeting, the Comedian was a sarcastic, misanthropic pessimist, Ozymandias instead wanted to help humans.

Daniel recalls a time wher the Comedian and the Night Owl tried to calm a riot during a police strike, the Comic gleefully shot tear gas at the people.

A tall wizened man pays his respects and goes back to his flat by an adult movie theatre. There he is assaulted by Rohrshach who wants to know why "Moloch" went to the funeral. Eddie Blake had broken into Moloch's house a week before and had cried and rambled about a list.

Laurie and Jon are having an intimate blue moment when Laurie realizes Jon has replicated himself and is working on the energy design at the same time. Angry at not having his full attention she throws an object through the blue figure's head. Laurie leaves as Jon teleports the machine to Adrian in Carnac.

Laurie goes to Daniel's house saying she has nowhere else to go. They go to meet Hollis for the weekly session.

Jon dresses in a suit and zaps himself over to a TV studio for an interview. Dan and Laurie are confronted by street thugs and they defend themselves with vigor. Manhattan is accused of afflicting his former colleagues and girlfriend with cancer. A wan and stricken Janie Slater damns Jon in public. In the ensuing press scrum Jon zaps himself to Mars. There he recalls years ago his relationship with Janie the lab accident and the development of Dr. Manhattan. He is tired of people and begins to build a large device on Mars.

Nixon, Kissinger and the war cabinet consider the recent events with the Soviet Union and prepare for war. Nixon says Dr. Manhattan has two days to solve the problems.

Lee Iaccoca and other industrial leaders meet with Adrian to discuss the energy crisis. Adrian mentions he has had a desire to be like Alexander the Great. A deliveryman arrives and starts shooting, Veidt eludes the bullets and subdues the shooter but the man manages to eat a poison pill and dies.

Laurie and Daniel discuss the attack as they lunch at the Gunga Diner. Daniel suggests Laurie move in with him, for safety, and they leave the diner as an unmasked Rorshach watches them walk arm in arm. Later Rorshach returns to Moloch's apt with the ID card of the man who tried to kill Adrian. The man works for Pyramid International and Rorschach had seen a letter from Pyramid at Moloch's earlier. However, Moloch is dead and the police have the building surrounded. Rorshach fights with fire but is captured and unmasked. He is identified on the TV News as Walter Kovacs, age 35. Walter is jailed for the murder of Moloch. Walter undergoes a psych assesment and as he looks at ink blots he recalls moments in his life. Walter does recall a seminal event, the grisly murder of a 6 yr old girl by a pedophile. In prison Rorshach has to defend himself on the food serving line, he splashes a large assailant with hot deep frier grease.

Laurie snoops around in the basement and finds the NightOwl's lab and flying machine. She accidentally fires up the rocket engines and Daniel comes down. She tries on the night vision owl goggles, then the two go upstairs and make love on the sofa.

Locked in his cell he is taunted by a dwarf, Rorshach had the man arrested 15 years earlier.

Daniel has a strange dream and wakens, Laurie finds him staring at his Night Owl gear. The two decide to get into costume and go out looking for trouble. The Night Owl flyer shoots out of the water and flies around the city. They find a burning building and rescue a group of people trapped on an upper floor. Daniel then puts the flyer on autopilot and the two superheroes have sex in the aircraft.