New York City teenager Clary Fray begins seeing a strange symbol, worrying her mother Jocelyn Fray and her mother’s friend Luke Garroway. Later, at a nightclub with her friend, Simon Lewis, Clary is the only person who sees Jace Wayland killing a man, who he claims is a demon. Meanwhile, Jocelyn is abducted by two men, Emil Pangborn and Samuel Blackwell, but she is able to call Clary and warn her about someone named Valentine. Jocelyn drinks a potion putting her in a comatose state. Returning home, Clary finds her mother missing and is then attacked by a demon. Clary kills it, and then Jace appears. Jace explains that he and her mother Jocelyn are both Shadowhunters (also called Nephilim), half human half angel warriors that slay demons and rule over the downworlders. Clary has inherited her powers, including the ability to use runes.
Madame Dorothea, the Fray’s neighbor and a witch, deduces that Pangborn and Blackwell seek the Mortal Cup, one of the three Mortal Instruments given to the first Shadowhunter by the Angel Raziel. It allows normal humans to become half-Angel Shadowhunters. Simon, now able to see Jace, arrives and they go to Luke’s bookstore. Pangborn and Blackhell are interrogating Luke there, who claims he cares nothing for Jocelyn and only wants the Mortal Cup. The trio escapes to the Shadowhunters’ hideout, the Institute, where Clary and Simon meet two other Shadowhunters Alec and Isabelle Lightwood, and their leader, Hodge Starkweather. He reveals that Valentine Morgenstern, an ex-Shadowhunter who betrayed the Nephilim, now seeks the Mortal Cup to control both Shadowhunters and demons.
Hodge instructs Jace to take Clary to the City of Bones so the Silent Brothers can probe Clary’s mind for the Mortal Cup’s location. The Brothers uncover a connection to Magnus Bane, the High Warlock of Brooklyn. Bane says Jocelyn had him block the Shadowhunter world from Clary’s mind. Vampires then kidnap Simon from Magnus’ party for downworlders. Clary, Jace, Alec, and Isabelle trail them to their hideout and rescue him but are outnumbered. Werewolves (that share a truce with the Shadowhunters) intervene and save them. These are led by Luke.
At the Institute, Clary shares a romantic evening with Jace, ending in a kiss. When Simon confronts Clary about it, she downplays the incident, angering Jace. Simon confesses to Clary that he is in love with her, leaving her feeling guilty because she does not reciprocate his feelings.