Spider-Man finally proves his worth as a super hero by defeating the Vulture and saving Vulture's life after his suit explodes. He is offered a spot on the Avengers, but turns it down in favor of finishing high school. The movie ends with Aunt May discovering that Peter is Spider-Man.
The movie opens in the aftermath of battle for New York as seen in The Avengers. Adrian Toomes (Michael Keaton) is the head of a company that has been cleaning up the debris and alien technology littering the streets after the battle. His operation is unceremoniously shut down by a clean-up company named Damage Control, which is owned by Tony Stark, aka, Iron Man (Robert Downey, Jr.). Deciding to get vengeance, Toomes and his crew start stealing alien technology. Toomes' right-hand man Phineas Mason (Michael Chernus), aka the Tinkerer, weaponizes the alien technology, which they then sell to criminals. The Tinkerer also builds Toomes a mechanized winged suit - the Vulture suit - that he uses to steal more alien technology. They keep their operation small-scale so as not to attract the attention of the Avengers or Damage Control.
Years later, Peter Parker (Tom Holland) aka Spider-Man, is desperate to further his crime-fighting career after his participation in the events of Captain America: Civil War. He has been gifted a high-tech suit by Tony Stark, but is relegated to fighting low level criminals such as bike thieves. At school, Peter has a crush on the leader of the Academic Decathlete team, Liz (Laura Harrier). He is unable to gain any headway with her as his desire to be Spider-Man full-time causes him to neglect his studies and jeopardizes his role on the Academic Decathlon team. Peter constantly harasses Happy Hogan (Jon Favreau), his contact to Tony, for more missions. Hogan largely ignores Peter's pleas.
Peter's friend Ned (Jacob Batalon) discovers that Peter is Spider-Man and begins assisting him in his crime fighting. As a skilled computer hacker, Ned hacks into the spider suit and allows Peter to access new capabilities that Tony had kept locked (believing Peter needed to earn access to the full array of the suit's capabilities). This includes unlocking an AI that Peter names Karen (voiced by Jennifer Connelly) and multiple types of web shooters.
One day, Spidey comes across one of Vulture's enforcers named the Shocker (Logan Marshall-Green) selling the repurposed alien weapons. Shocker escapes, but is killed by for subsequently threatening to leave the group. Toomes then callously gives the Shocker's tech to a new henchman (Bokeem Woodbine). The Vulture then confronts and almost kills Spider-Man, but Iron Man saves his life and then warns him not to go after the Vulture. Spidey disobeys and coerces a repentant criminal named Aaron Davis (Donald Glover) to help him track The Vulture's lair to Maryland. Using the Academic Decathlete team's trip to the national competition as cover, Peter travels to DC to confront the Vulture. Instead, he ends up failing to defeat the Vulture and misses the academic competition (although he does save the academic teams' lives when they are caught in the middle of the battle). Later, during a third confrontation back in New York, a ship full of people is almost destroyed in the battle (Iron Man again shows up and saves the ship). Fed up with Peter's reckless actions, Tony takes back the Spider suit. He tells Peter that he will never be a hero if he relies only on his suit.
Peter begins to focus again on his studies. He successfully asks Liz to the homecoming dance, and Aunt May (Marisa Tomei) helps prepare him for his first big date. When he arrives at Liz's house to pick her up, he discovers that Toomes is her father. Toomes, recognizing Peter's voice, deduces that Peter is Spider-Man. Toomes corners Peter and tells him to leave his operation alone or else he will kill him and his entire family. Peter goes into the dance, but quickly ditches Liz to pursue her father in a homemade Spider-suit. With Ned's help, he defeats the Shocker, who was posted outside the dance in the event Peter chose to go after Toomes.
Spider-Man confronts the Vulture attacking a plane commanded by Happy Hogan and loaded with Avengers equipment. Spider-Man is almost defeated, but remembers Tony's words that he makes himself a hero. With newfound faith in himself, Spidey manages to defeat the Vulture and crash land the airplane without hurting anyone. The Vulture tries to escape, but the damage to his suit causes it to explode. Spider-Man drags Toomes out of the wreckage, saving his life. But with her dad now incarcerated, Liz is forced to move away (and is clearly upset that Peter abandoned her at the dance).
The film ends with Tony inviting Peter to join the Avengers. He turns down the offer, preferring to stay in school with his friends. Peter is welcomed back to the academic decathlon team, now led by Michelle (Zendaya), aka "MJ," who seems to have a crush on Peter. Tony returns the high-tech Spider suit to Peter. As Peter gleefully puts on his Spider-Man suit in his room, Aunt May opens his door and exclaims "What the F***!" as the credits roll.
Two post-credit scenes:
Also featuring cameos by Gwyneth Paltrow (as Pepper Potts - still in love with Tony Stark), Tony Revolori, Hannibal Burress, Selenis Leyva, Martin Starr, and, of course, Stan Lee.