In 1949 Los Angeles, gangster Mickey Cohen has become the most powerful figure in the California criminal underworld, and intends to continue to expand his criminal enterprise to Chicago and New York City. The police have not been able to stop Cohen's ruthless rise, as Cohen has eliminated witnesses and bribed both the court and the police, controlling both the illegal and legal sides of L.A.
Determined to put a stop to Cohen, Chief Bill Parker, the head of the Los Angeles Police Department, creates a secret police unit with the sole mission of stopping Cohen and bringing him to justice. Sgt. John O'Mara, a respected L.A police officer and Parker's old friend, is placed in charge of recruiting additional officers. With the help of his wife, Connie, he recruits Sgt. Jerry Wooters and detectives Coleman Harris, Conway Keeler, Navidad Ramirez, and Max Kennard. Calling themselves the "Gangster Squad", the unit begins the task of destroying Cohen's criminal operations.
The unit's plans go well, and the unit strikes several successful blows at the heart of Cohen's criminal organization and manages to shut down a very lucrative wire gambling business. Cohen believes someone has betrayed him and strikes out at those around him, including his girlfriend Grace Faraday. Wooters has also been romancing Faraday and tries to help her escape from Cohen. Cohen discovers that the police unit bugged his house, and is able to lure the police unit into a trap in Los Angeles' Chinatown while Keeler is killed at the unit's operation. Faraday later witnesses Cohen murder Wooters' friend, Jack Whalen, who had been helping her escape. With Faraday willing to testify against Cohen, O'Mara, along with the remaining members of his unit, blackmails a crooked judge to sign an arrest warrant for Cohen, then goes to the Park Plaza Hotel to arrest him.
Cohen and his men engage in a gun battle with the police unit, with Wooters being wounded in the process. Cohen and his bodyguard Karl Lennox escape, but O'Mara pursues them, which results in their vehicle crashing into a fountain. Kennard gets fatally wounded from a gunshot, but he manages to kill Lennox with Navidad's help before he can shoot O'Mara. Cohen and O'Mara fight each other in a brutal bare-knuckle fight, while a crowd of onlookers and journalists gather. O'Mara finally beats Cohen and has him arrested, ending his reign as a crime boss and the spread of the mafia into the Los Angeles area. The Gangster Squad was never mentioned in taking down Cohen, their surviving members remaining a secret; Cohen is sentenced to 25 to life, but gets beaten by inmates who were friends of Jack Whalen.
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