The film performed reasonably well at the box office. Having been made on a budget of $10,000,000, it went on to earn more than $80,000,000 in the United States.
Saw III was rated R by the Motion Picture Association of America for horror, strong and bloody violence (including scenes of torture), nudity and bad language. An uncut and unrated version has also been released in the United States. The film was banned in Malaysia.
Minutes after he is trapped in the bathroom, Eric Matthews escapes the shackle by breaking his foot with a toilet tank cover. Six months later, a new game is discovered by a SWAT team led by Lt. Daniel Rigg, who calls Detectives Mark Hoffman and Allison Kerry, who is guilt-ridden over Matthews's disappearance, to the scene. In his test, Troy had to rip chains from his flesh to escape from a bomb. However, the door to the room was welded shut.
As the trap was inescapable, Kerry believes that it was not Jigsaw who designed it. While reviewing Troy's tape at home, Kerry is attacked and awakens in a harness hooked into her ribs.
Lynn Denlon, a depressed doctor, is abducted and brought to John Kramer, now bedridden from cancer, by Amanda Young. She is given instructions to keep John alive until the other victim, Jeff, has completed his game. As she begins working to keep John alive, Jeff awakens in a box in an abandoned meatpacking plant and is informed that he must undergo tests which will lead him to the man responsible for the loss of his child. It is shown that his son Dylan was hit and killed by a car three years earlier, which Jeff is unable to cope with. He is vengeful towards everyone involved and neglects his daughter, Corbett, as a result.
Jeff's first test leads him into a meat freezer, where he finds Danica Scott, who refused to testify against his son's killer. She is naked and chained at the wrists between two poles which spray her body with ice-cold water at random intervals.
Though she eventually convinces Jeff to help her, she freezes to death before he can retrieve the key. His second test leads him to a large vat, where he finds Judge Halden, who sentenced his son's killer to six months in prison, chained at the neck at the bottom. The pit is slowly being filled with liquefied pig corpses, but Jeff reluctantly saves him by incinerating his son's toys to retrieve the key. His third test leads Jeff and Halden to Timothy Young, his son's killer, who is strapped to a machine that will twist his limbs and neck one by one until they break. Jeff initially watches Timothy suffer, but is eventually convinced by Halden to retrieve the key from the shotgun trigger. He accidentally discharges the shotgun in the process, killing Halden, and is unable to free Timothy before his neck breaks.
Amanda leaves, distressed by this, and is revealed to have continued cutting herself after John became bedridden. She recalls becoming John's protege and assisting with the bathroom trap by abducting Adam Stanheight, who she gave a mercy killing out of guilt shortly after he was left to die. She also finds a letter in her name, its contents driving her to hysterics. As Lynn reveals to John that her ordeal has renewed her appreciation for her family, Amanda returns with the news that Jeff has completed his tests, though she refuses to release Lynn. At John's prompting, Amanda also reveals that she left Eric Matthews for dead after he escaped and fought with her.
Amanda shoots Lynn in the back just as Jeff arrives, and he retaliates by shooting her in the neck. With great sadness, John tells Amanda that the game was hers: she was being tested on her will to keep someone alive, unaware that Jeff and Lynn were married. After she dies, John offers to call an ambulance for Lynn if Jeff accepts one final test, where he must choose between killing John and forgiving him. As Jeff says he forgives John, he slashes John's throat with a circular saw.