Like its predecessor, Saw II was a box office success. having been made on an estimated budget of $5,000,000, the movie went on to earn more than $147,000,000 worldwide.
Saw II was rated R by the Motion Picture Association of America for bloody violence, terror, references to drug use and bad language. The film was banned in Malaysia.
Michael awakens to find two halves of a spike-filled mask locked around his neck. A videotape states that he has one minute to extract the key from behind his right eye with a scalpel, but he fails and is killed when the mask closes around his head. Detective Eric Matthews is called to the scene by Detective Kerry after a message for him is found, and she uses the mask to lead him and a SWAT team to an abandoned steel factory. They find John Kramer, the cancer-weakened Jigsaw Killer, as well as computer monitors showing eight people, including Daniel, Eric's son, and Amanda, the only known survivor of John's games. They are trapped inside a house and have two hours before a nerve agent filling the house kills them, but John assures Eric that he will find his son in a safe, secure state if he talks alone with John, and Eric reluctantly agrees in order to buy time for the tech team to track the signal.
The eight victims - Daniel, Amanda, Gus, Obi, Jonas, Xavier, Laura, and Addison are told by tape recorder that antidotes have been placed around the house to save them from the gas, and that one of them is in the safe with them, the combination to which is at the back of their minds and can be determined by following the rainbow.
Xavier and Gus inspect the door, and Gus is killed when a gun fires through the peephole. He tries to retrieve two of the antidotes from the furnace, but he accidentally turns it on and is unable to escape before he is burned alive. After Daniel learns from Amanda that she was previously tested, Jonas leads them to an upstairs room that Xavier manages to break into, which houses another antidote behind a steel door, and a pit filled with syringes which contains the key.
In the factory, John infuriates Eric with idle conversation and cryptic words, eventually revealing his backstory: after learning of his cancer, John tried to commit suicide by driving off a cliff, but survived the crash despite his injuries and decided to spend the rest of his life testing others. The tech team arrives, and John reveals through provided files that the other seven victims are criminals who Eric himself had framed for various crimes, and that Daniel will be in danger if they discover his identity. At Kerry's suggestion, Eric destroys many of John's documents, though he does not appear to care.
Xavier returns to the first room, where he discovers a colored number on Gus's neck and realizes that everyone in the house has a piece of the safe's combination. Now desperate to get the antidote, he kills Jonas in a fight and begins hunting the others. Laura succumbs to the nerve agent, and Amanda and Addison abandon Daniel after learning his identity, but Amanda returns immediately after finding Jonas's body. Addison finds a room with an antidote in a glass box, but her arms become trapped in the razor blade-lined sockets, and Xavier leaves her to die after reading her number. Amanda and Daniel return to the first room and find a tunnel that eventually leads them to the bathroom from the first film, which houses Lawrence Gordon's severed foot and the corpses of Adam and Zep. Daniel collapses moments before Xavier finds them. Amanda points out that Xavier cannot read his own number, and he cuts the skin from his neck to read it. He then moves to kill them but is killed first when Daniel, who feigned collapse, slashes his neck with Lawrence's hacksaw. Having seen Xavier chasing Daniel, Eric assaults John and forces him to lead the way to the house at gunpoint. The SWAT team simultaneously infiltrate a similar house using the video feed's signal, finding only VCRs playing previously-recorded images, revealing that the gas house tests took place before they found John.