An attack at the sacred city of Alamut is planned by Dastan (Jake Gyllenhaal), an orphan in the Persian Empire adopted by king Sharaman (Ronald Pickup), his royal-blooded foster brothers, Tus (Richard Coyle) and Garsiv (Toby Kebbell), and his uncle, Nizam (Ben Kingsley), after Alamut is believed to be selling weapons to Persia's enemies. Dastan leads a surprise attack to open the city's gates to allow the army in; during the ensuing battle, Dastan comes into possession of a unique dagger. Alamut's princess, Tamina (Gemma Arterton), is arrested and agrees to marry Tus in order to achieve peace after noticing Dastan's dagger.
Dastan unknowingly presents a poisoned robe, given to him by Tus, to his father, who dies upon donning it. After being blamed for the murder, Dastan flees Alamut with Tamina. When Tamina attempts to kill the prince, Dastan discovers the dagger can reverse time and only the one who activated and holds it is aware of what happened. After an encounter with shady ostrich racing-organizer Sheik Amar (Alfred Molina) and his knife-throwing African friend Seso (Steve Toussaint), Dastan and Tamina head to Avrat for Sharaman's funeral. Dastan attempts to convince Nizam that he did not kill his father, and notices Nizam's hands are burned by the same poison put on the robe that killed his father. Garsiv and the city guards appear and attack Dastan and he is forced to escape.
Dastan catches up with Tamina and explains that Nizam was behind the murder. Once Tamina finally explains everything about the Dagger, Dastan realizes why Nizam wants the Dagger of Time: to use it with the massive Sandglass to go back in time and undo saving Sharaman from a lion so he could become king. He fabricated the false allegations that Alamut had been dealing weapons to Persia's enemies so that he would have the opportunity to search the city for the Sandglass. However, Tamina warns that opening the Sandglass would release the sands, triggering an apocalyptic sandstorm...
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