Dastan doesn’t remember much of his parents. His strongest memory of his father was of him telling him to stay hidden. He watched from a hiding place as his father was struck down. The face of the man who killed him – ingrained into his memory.
As was the red sash that was always tied around his father’s waist. He had taken it when the villagers had came for him. It was the only thing he had left.
One day, when the Sharaman visited the market square, he saw the young Dastan risking his life to save his childhood friend and fellow urchin, Bis, from the guards, he saw the “Spirit of a Noble King” inside him and decided to adopt him as a son.
Dastan grew up as one of Sharaman’s sons. He shied away from the courts and focused on training his military skills. He was quick on his feet, and had abilities to get into places most never even thought about.
Dastan and his brothers, under the advisement of their uncle, Nizam, set out to the Persian borders near the sacred city of Alamut. It was said that Alamut has been selling weapons to the Persian enemies in “Koschkan”. Dastan led the strike force into the city to open the main gates, giving the Persian soldiers the victory. Shortly thereafter, Dastan encounters a man on horseback and defeats him, discovering the Dagger of Time in the process. Alamut’s princess, Tamina, is captured and agrees to marry Tus in order to achieve peace after noticing the dagger in Dastan’s possession. Their father, Sharaman, was angry with them, saying that their “adventure” would not sit well with their allies.
Sharaman reproaches Tus for attacking the city and suggests that Dastan, instead of Tus, should marry Tamina. At the victory banquet, Dastan unknowingly presents a poisoned robe, given to him by Tus, to his father, who dies shortly after donning it. Dastan is blamed for the king’s murder and flees Alamut with Tamina. Together they venture into the wilderness.
In their first camp, Tamina attempts to kill the prince and recover the dagger. During their fight Dastan hits the dagger out of Tamina’s hand, and when he grabs it from the sand, accidentally presses the jewel button on the hilt that activates its rewinding power. Dastan is transported back to just before Tamina tries to kill him. Shocked at what has just transpired, Dastan hesitates, allowing Tamina to slash him across the chest with his sword. Collapsing to the ground, Dastan pulls the dagger from his belt and activates it again, to Tamina’s obvious horror. Again he is taken back to just before the princess tries to kill him.
Dastan realizes that the dagger can turn back time, and that only the one who holds it is aware of this. After this the two continue on into the desert. During their journey, the duo meets a shady ostrich racing-organizer and tax-averse entrepreneur, Sheik Amar, and his knife-throwing friend, Seso. Dastan offers Tamina up as a slave in return for supplies; however, Amar betrays him because he recognizes him as the murderer of the king, for whom there is an “obscene” reward being offered.
Dastan and Tamina escape and return to Persia for Sharaman’s funeral. Dastan attempts to convince Nizam that he did not kill his father. Dastan discovers that Tamina has taken the Dagger; however, he then notices Nizam’s hands are burned by the same poison put on the robe that killed his father. Nizam claims that his hands got burnt by his trying to pull the robe off his brother at the time, but Dastan does not remember Nizam ever touching it, realizing that Nizam must have been the one who poisoned the robe. 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 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 it. Not knowing its power is only to fix an instant mistake.
Dastan manages to persuade his brother that he is innocent, only for Garsiv to be fatally wounded by a member of the Hassassin’s. The group attacks, killing most of the group, while Dastan and Tamina sneak away to the secret cave where they can hide the Dagger. Tamina says she is ready to give up her life to protect the Dagger, but Dastan stops her and tells her that he is not ready for her to die. They are found and attacked and Zolm manages to snatch the Dagger of Time from Tamina.
Dastan stands in front of The Hassassin, recognizing him as the man who killed his father. The man laughs and calls him child playing Assassin, pointing at the red sash around his waist. Tells him his father was the last of the great Assassins, and with Dastan’s death there will be no more.