In 1996, treasure hunter Brock Lovett and his team explore the wreck of RMS Titanic, searching for a valuable diamond necklace called the Heart of the Ocean. They recover Caledon "Cal" Hockley's safe, thinking the necklace is inside, but instead find a sketch of a nude woman wearing it, dated April 14, 1912, the night the Titanic hit the iceberg. Hearing about the drawing, an elderly woman named Rose Dawson Calvert calls Lovett to claim that she is the woman depicted in the drawing. She and her granddaughter, Lizzy Calvert, visit him and his team on his salvage ship. When asked if she knows the whereabouts of the necklace, Rose recalls her time aboard the Titanic, revealing that she is Rose DeWitt Bukater, a passenger believed to have died in the sinking.

The story flashes back to 1912, when 17-year-old first class passenger Rose boards "Titanic" in Southampton with her fiancé Cal and her mother Ruth DeWitt Bukater. Ruth stresses the importance of Rose's engagement, as the marriage would solve the DeWitt Bukaters' secret financial problems. Distraught by her engagement, Rose considers suicide by jumping off the ship's stern; coincidentally, a drifter and artist named Jack Dawson intervenes and convinces her not to jump. Discovered with Jack on the stern, Rose tells Cal that she was looking over the ship's edge in curiosity and that Jack intervened and saved her from falling, almost going over himself as well. When pressed, Jack confirms her account. Cal is at first aloof to Jack's actions, but when Rose indicates that recognition is due, he offers him a small amount of money. After Rose mocks Cal for this, asking if saving her life means so little, he invites Jack to a first-class dinner the following night. Jack and Rose develop a tentative friendship, even though Cal and Ruth are wary of the young third-class man. Following dinner that night, Rose secretly joins Jack at a party in the ship's third-class quarter.

Since Cal and Ruth do not approve of Rose seeing Jack, Rose attempts to rebuff Jack's continuing advances. She soon realizes, though, that she prefers him over Cal, and meets him at the bow of the ship during what turns out to be the Titanic's final moments of daylight. They then go to Rose's stateroom, where she asks Jack to sketch her nude while wearing the Heart of the Ocean, Cal's engagement present to her. Afterward, they evade Cal's bodyguard and have sex inside a car in the ship's cargo hold. Afterward, the pair go to the ship's forward well deck and witness the ship's collision with an iceberg, overhearing the ship's officers and designer outline its seriousness. Rose and Jack decide they should warn her mother and Cal.

Cal discovers Jack's drawing and a mocking note from Rose in his safe along with the necklace. Furious, he has his bodyguard slip the necklace into Jack's coat pocket. Accused of stealing it, Jack is arrested, taken down to the Master-at-arms's office and handcuffed to a pipe. Cal then puts the necklace in his own coat. Rose runs away from Cal and her mother (who has boarded a lifeboat) and releases Jack. The ship then starts to launch flares in order to attract any nearby ships.

Once Jack and Rose reach the deck, Cal and Jack encourage Rose to board another lifeboat, Cal claiming that he has arranged for himself and Jack to get off safely. After she boards, Cal tells Jack that the arrangement is only for himself. As Rose's boat lowers, she realizes that she cannot leave Jack, and jumps back on-board the Titanic to reunite with him. Infuriated, Cal takes a pistol and chases them into the flooding first-class dining saloon. After exhausting his ammunition, Cal realizes to his chagrin that he gave his coat with the diamond to Rose. With the situation now extreme, he returns to the boat deck and boards a lifeboat by pretending to look after a lost child.

Jack and Rose return to the top deck. All lifeboats have now departed and passengers are falling to their deaths as the stern rises out of the water. The ship breaks in half, and the stern rises 90-degrees into the air. As it sinks, Jack and Rose ride the stern into the ocean. Jack helps Rose onto a wall panel only able to support one person's weight. Holding onto the edge of the panel, he assures her she will die an old woman, warm in her bed. Meanwhile, Fifth Officer Harold Lowe has commandeered a lifeboat to search for survivors. Jack soon dies from hypothermia. Rose draws the attention of Lowe's boat, and is ultimately saved.

Rose and the other survivors are taken by the RMS Carpathia to New York, where Rose gives her name as Rose Dawson. She hides from Cal on Carpathia's deck as he searches for her. She learns later that he committed suicide after losing his fortune in the Wall Street Crash of 1929.

In the present, with her story complete, Rose goes alone to the stern of Lovett's ship. There she takes out the Heart of the Ocean, which has been in her possession all along, and drops it into the ocean. While seemingly asleep in her bed, the photos on her dresser are a visual chronicle that she lived a free life inspired by Jack. The young Rose is then seen reuniting with Jack at the Grand Staircase of the RMS Titanic, applauded and congratulated by those who perished on the ship.

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