The series stars Carla Gugino as Dr. Molly Caffrey, a high-level government crisis management consultant from the Blackwood Institute whose job is to create contingency plans for use in emergencies ranging from natural disasters to nuclear war. In order to have "all bases covered", one of her plans, code-named Threshold, is developed for dealing with the unlikely eventuality of first contact with aliens. One night, the crew of a U.S. naval vessel encounters a UFO. Many crew members subsequently die horribly, but some escape. After the ship is discovered with dead crew members and a videotape of the encounter, the Threshold protocol is activated.

Caffrey's Threshold plan calls for the formation of a secret government task force known as the Red Team. As a result, several top scientists are seconded: Dr. Nigel Fenway (Brent Spiner), an individualistic NASA-employed microbiologist; Lucas Pegg (Rob Benedict), a somewhat unsure-of-himself aerospace engineer on the eve of his marriage, and Arthur Ramsey (Peter Dinklage), a mathematics and linguistics genius whose libido makes up for his lack of height. Caffrey's government liaison is Deputy National Security Advisor J.T. Baylock (Charles S. Dutton), while freelance paramilitary operative Sean Cavennaugh (Brian Van Holt) serves as the "muscle" of the group (and apparent potential love interest for Caffrey). Daphne Larson (Catherine Bell) was added to the team in the episode "Outbreak". Caffrey's team works under absolute secrecy, their activities not even known to the Vice-President, or the Joint Chiefs of Staff.

Threshold learns that the aliens are attempting to rewrite the DNA of the human race using, in part, an audio signal that somehow alters some people's body chemistry in such a way that they become alien themselves. Central to all this is a fractal triskelion pattern that keeps appearing – in electronic signals, blood, and even the pattern made by city lights. Its significance has yet to be revealed, though Arthur Ramsey interpreted it as representing a DNA pattern in a triple helix formation (like the alien DNA).

The episodes focus on Caffrey and her team as they learn more about the signal, the fractal pattern, and the aliens. Often, their work requires them to impersonate different U.S. Government agencies. Compounding the situation, Caffrey, Cavennaugh and Pegg were exposed to a small part of the signal, which while not (as yet) infecting them, has nonetheless altered their brains, causing the trio to have bizarre, linked dreams, and also receive messages from the aliens with Caffrey, in particular, experiencing frightening, often violent hallucinations. Individuals experiencing these visions have been referred to as "dreamers" by the Threshold Red Team.

An ongoing subplot of the series is the emotional impact Threshold has on Caffrey herself, as she is required to make life-and-death decisions on an almost daily basis. The impact on other members of her team is also explored.