In response to a record high crime rate in Johannesburg, the South African government purchases a squadron of state-of-the-art, armour-plated attack robots from weapons manufacturer Tetravaal, developed by Deon Wilson. A competing project is the remotely controlled MOOSE, developed by soldier-turned-engineer Vincent Moore. Deon is praised for Tetravaal’s success but Vincent grows jealous when the police are unwilling to give his heavy weapons platform equal attention. At home, Deon creates a prototype artificial intelligence that mimics a human mind to the point of feeling emotions and having opinions, but Tetravaal CEO Michelle Bradley refuses to let him test the A.I. on a police robot. Undeterred, Deon steals a recently damaged robot before it is destroyed and puts it in his van, along with the “guard key” needed to update the robot’s software. On his way home, he is kidnapped by a group of gangsters, Ninja, Yolandi, and Amerika, who threaten to kill him unless he reprograms a police robot to fight for them. Deon installs the new software into the damaged robot, which responds with childlike terror upon powering up. Deon and Yolandi calm the robot, teaching it words and naming it “Chappie”. Despite Deon wanting to stay with the robot, Ninja forces him out of their hideout.
Ninja’s gang only has a few days to pay a debt of 20 million rand to Hippo, a powerful gangster. Yolandi sees Chappie as a child and wants to mother him, but Ninja grows impatient with his development due to both the impending deadline for the debt and Chappie’s irreplaceable battery running out, giving him days to live. Ninja tries to train Chappie to be a gangster by leaving him to fend for himself in a dangerous neighborhood. After being wounded by thugs, he is followed by Vincent, who plans to deactivate all Tetravaal weapons except for MOOSE. Vincent successfully extracts the guard key for his own use, but the traumatised Chappie escapes and returns to the hideout. Yolandi scolds Ninja for this mistreatment, but he manages to earn Chappie’s forgiveness by training him in martial arts and weapon handling. Ninja and Amerika trick Chappie into stealing cars for them, and lie about needing the money to replace his dying body.
At Tetravaal, Vincent uses the guard key to upload a virus shutting down all police robots including Chappie. Johannesburg’s criminals immediately start rioting in the streets, and Deon brings Chappie to the Tetravaal factory to fix him. After being restarted, Chappie notices a helmet used to control MOOSE. At the hideout, he re-engineers it to allow him to transfer his consciousness into a computer, so he can change bodies when his current one dies. Ninja’s gang uses Chappie to raid a police van and steal money, which is caught on the news, prompting Tetravaal to pursue him. When Chappie learns that Ninja’s plan to acquire the body was a lie, he prepares to kill Ninja for betrayal. However, Deon arrives to warn them that Michelle Bradley has ordered that Chappie be destroyed. At that moment, the MOOSE robot (controlled remotely by Vincent) is launched to assassinate Deon and Chappie at the hideout, at the same time that Hippo arrives to collect his debt. Amerika and Hippo are killed in the ensuing battle, while Deon is mortally wounded. When Ninja is about to be killed, Yolandi sacrifices herself to save him and Chappie destroys MOOSE by detonating a bomb.
Enraged by Yolandi’s death, Chappie drives Deon to the factory, storms into an office, and fiercely beats Vincent close to death. He then transfers the dying Deon’s consciousness into a spare robot through the modified MOOSE helmet. As Chappie’s battery dies, the now-robotic Deon wirelessly transfers Chappie’s consciousness into a deactivated police robot nearby. Deon and Chappie go into hiding as the police discontinue their contract with Tetravaal. The grieving Ninja finds a flash drive marked “Mommy’s Consciousness Test Backup”, which contains a copy of Yolandi’s consciousness that Chappie took while testing the device on her. Chappie hacks into Tetravaal’s manufacturing facility, builds a robot resembling Yolandi, and uploads the drive’s contents.