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John Kramer/Jigsaw (Tobin Bell) is on his death bed. He has Amanda Young (Shawnee Smith) kidnap Dr. Lynn Denlon (Bahar Soomekh), a skilled surgeon, and a collar loaded with five shotgun shells is placed around her neck. She is informed that it is her duty to keep John alive long enough for him to watch a second game involving another person. If she moves too far away from John or he dies, the collar will trigger, killing her. If she keeps him alive, they will let her go. Jeff Denlon (Angus Macfadyen), whose eight-year-old son was killed three years ago by a drunk driver, has become obsessed with revenge against those he deems responsible. His obsession has put a great deal of stress on his marriage, and caused him to neglect his remaining child, Corbett (Niamh Wilson). His test is to make his way through a meat packing factory where the three people he holds most responsible for his son's death have been imprisoned: Danica Scott (Debra McCabe), the only witness to the accident who refused to testify; Judge Halden (Barry Flatman) who sentenced the driver to only six months in prison; and Timothy Young (Mpho Koaho), the drunk driver that killed Jeff's son. Jeff must choose whether to save them and let go of the past or to exact his revenge by letting them die and put his future at risk.

Saw III is the third film in the Saw series, preceded by Saw (2004) and Saw II (2005), all of which stem from an original screenplay by screenwriters Leigh Whannell and James Wan. Whannell also wrote the screenplay for Saw III. It is followed by Saw IV (2007), Saw V (2008), Saw VI (2009), Saw 3D (2010), and Jigsaw (2017).

Immediately. The opening of Saw III shows Detective Eric Matthews still trapped in the bathroom where Amanda left him shackled to the plumbing at the end of Saw II (2005). With only a flashlight to see in the dark, Eric is able to see the leftovers from the previous incident in the bathroom (from Saw), which are Dr. Gordon's decayed foot and the bodies of Adam and Zep. Realizing that he is going to die if he doesn't get out of the bathroom, Matthews reaches for the hacksaw, but cannot bring himself to cut off his foot. Instead, he uses a piece of the broken toilet tank lid to break his ankle so that he can slip it out of the chain. The film then shows another incident six months later, in which Detective Allison Kerry is investigating Jigsaw's latest victim, Troy (J. LaRose), whose body was blown apart when he failed to break free of the chains that pierced his body and held him prisoner. She also notices that this game is not typical of Jigsaw, as the door to Troy's chamber was welded shut. Even if he had escaped the chains in time, there was no way for him to escape the bomb. That night, Kerry is kidnapped and forced to play another of Jigsaw's games. Her rib cage is attached to a device that can be opened by obtaining a key that has been placed in a beaker of acid. When she gets the key and unlocks the device, it does not open. She sees someone in the shadows and says "You" before her rib cage is torn apart, killing her. The main part of the movie, where Jigsaw plays the game with Jeff and Lynn, takes place 4 days later.

In the U.S. three versions have been released: The Theatrical Version, the Unrated Version, and a Director's Cut. The theatrical version was trimmed down in 132 scenes (most of them cuts due to violence to secure the R rating). The theatrical version has also been released on DVD as well as an unrated version which includes the scenes that were cut from the theatrical version. A few months later a Director's Cut was released. It includes all of the scenes from the unrated version but also offers some new plot scenes and an alternate ending.