The story is set in 1996. When the United States National Security Agency's (NSA) code-breaking supercomputer TRANSLTR encounters a revolutionary new code, Digital Fortress, that it cannot break, Commander Trevor Strathmore calls in head cryptographer Susan Fletcher to crack it. She is informed by Strathmore that it was written by Ensei Tankado, a former NSA employee who became displeased with the NSA's intrusion into people's private lives. If the NSA doesn't reveal TRANSLTR to the public, Tankado intends to auction the code's algorithm on his website and have his partner, "North Dakota", release it for free if he dies, essentially holding the NSA hostage. Strathmore tells Fletcher that Tankado has in fact died in Seville at the age of 32, of what appears to be a heart attack. Strathmore intends to keep Tankado's death a secret because if Tankado's partner finds out, he will upload the code. The agency is determined to stop Digital Fortress from becoming a threat to national security.

Strathmore asks Fletcher's fiancé David Becker to travel to Seville and recover a ring that Tankado was wearing when he died. The ring is suspected to have the passcode that unlocks Digital Fortress. However, Becker soon discovers that Tankado gave the ring away just before his death. Unbeknown to Becker, a mysterious figure, named Hulohot, follows him, and murders each person he questions in the search for the ring. Unsurprisingly, Hulohot's final attempt would be on Becker himself.

Meanwhile, telephone calls between North Dakota and Tokugen Numataka reveal that North Dakota hired Hulohot to kill Tankado in order to gain access to the passcode on his ring and speed up the release of the algorithm.

At the NSA, Fletcher's investigation leads her to believe that Greg Hale, a fellow NSA employee, is North Dakota. Phil Chartrukian, an NSA technician who is unaware of the Digital Fortress code breaking failure and believes Digital Fortress to be a virus, conducts his own investigation into whether Strathmore allowed Digital Fortress to bypass Gauntlet, the NSA's virus/worm filter. To save the TRANSLTR Phil decides to shut it down but is murdered after being pushed off sub-levels of TRANSLTR by an unknown assailant. Since Hale and Strathmore were both in the sub-levels, Fletcher assumes that Hale is the killer; however, Hale claims that he witnessed Strathmore killing Chartrukian. Chartrukian's fall also damages TRANSLTR's cooling system.

Hale holds Fletcher and Strathmore hostage to prevent himself from being arrested for Phil's murder. It is then that Hale explains to Fletcher, the e-mail he supposedly received from Tankado was also in Strathmore's inbox, as Strathmore was snooping on Tankado. Fletcher discovers through a tracer that North Dakota and Ensei Tankado are the same person, as "NDAKOTA" is an anagram of "Tankado."

Strathmore kills Hale and arranges it to appear as a suicide. Fletcher later discovers through Strathmore's pager that he is the one who hired Hulohot. Becker manages to track down the ring, but ends up pursued by Hulohot in a long cat-and-mouse chase across Seville. The two eventually face off in a cathedral, where Becker finally kills Hulohot by tripping him down a spiral staircase, causing him to break his neck. He is then intercepted by NSA field agents sent by Leland Fontaine, the director of the NSA.

Chapters told from Strathmore's perspective reveal his master plan. By hiring Hulohot to kill Tankado, having Becker recover his ring and at the same time arranging for Hulohot to kill Becker, he would facilitate a romantic relationship with Fletcher, regaining his lost honor. He has also been working incessantly for many months to unlock Digital Fortress, installing a backdoor inside the program. By making phone calls to Numataka posing as North Dakota, he thought he could partner with Numatech to make a Digital Fortress chip equipped with his own backdoor Trojan. Finally, he would reveal to the world the existence of TRANSLTR, boasting it would be able to crack all the codes except Digital Fortress, making everyone rush to use the computer chip equipped with Digital Fortress so that the NSA could spy on every computer equipped with these chips.