The events of the past are revealed through the diaries of magicians Rupert Angier and Alfred Borden. The diaries are read by their great-grandchildren, Kate Angier and Andrew Westley (born Nicholas Borden) in the present day, and diary entries are interspersed with events of Kate's and Andrew's lives throughout the novel. The central plot focuses on a feud between the fledgling magicians, beginning when Borden disrupts a fake seance being conducted by Angier and his wife after having conducted a previous one for one of Borden's relatives (Borden was upset that they were presenting it as real when in truth he realized it was an illusion). During a scuffle, Angier's pregnant wife Julia is thrown to the ground, resulting in a miscarriage. The two men are mutually antagonistic for many years afterward as they rise to become world-renowned stage magicians.
Borden develops a teleportation act called "The Transported Man", and an improved version named "The New Transported Man", which appears to move him from one closed cabinet to another in the blink of an eye without appearing to pass through the intervening space. The act seems to defy physics and puts all previous acts to shame. We learn that Alfred Borden is actually not one man but two: identical twins named Albert and Frederick who share the identity of "Alfred Borden" secretly to ensure their professional success with "The New Transported Man". Angier suspects that Borden uses a double, but dismisses the idea because he thinks it is too easy.
Angier desperately tries to equal Borden's success. With the help of the acclaimed inventor Nikola Tesla, Angier develops an act called "In a Flash", which produces a similar result through a starkly different method. Tesla's device teleports a being from one place to another by creating a duplicate at the destination, leaving the original subject behind. Angier is forced to devise a way to conceal the original to preserve the illusion. He bitterly refers to these "shells" as "prestiges".
Angier's new act is as successful as Borden's. Borden, in retaliation, attempts to discover how "In a Flash" is performed. During one performance he breaks into the backstage area and turns off the power to Angier's device. The subsequent teleportation is incomplete, and both the duplicated Angier and the "prestige" Angier survive, but the original feels increasingly weak while the duplicate seems to lack physical substance. The original Angier fakes his own death in order to put behind his public persona of a magician and returns as the heir to his family estate, Caldlow House, without any publicity. While there, he becomes terminally ill.
The duplicate Angier, alienated from the world by his ghostly form, discovers Borden's secret. He attacks one of the twins before a performance. However, Borden's apparent poor health and the duplicate Angier's sense of morality prevent the assault from becoming murder. It is implied that this particular Borden dies a few days later, and the incorporeal Angier travels to meet the corporeal Angier, now living as the 14th Earl of Colderdale. They obtain Borden's diary and publish it without revealing the twins' secret. Shortly afterwards, the corporeal Angier dies and his ghostly clone uses Tesla's device to teleport himself into the body, hoping that either he will reanimate it and be whole again, or kill himself instantly. It is revealed in the final chapter that some form of Angier has continued to survive to the present day.