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At Compton, California in 1986, Eazy-E, a drug dealer, evades a police raid at a crack house. Dr. Dre lives with his mother and struggles with what he wants to do with his life. Ice Cube is a high school senior who lives in a middle-class household, but in a crime-ridden neighborhood, and is harassed by the police.
Sometime later, Eazy and MC Ren, a pair of Crips in a Blood territory, go to the club Doo-Toos where Dre and DJ Yella work as DJs. Dre brings Cube to the stage and he performs the song "Gangsta Gangsta". When Dre leaves the club, he is arrested after breaking up a fight involving his brother Tyree. Eazy bails him out the next day, and Dre talks to him about investing in a start-up label, to which Eazy agrees. Dre encourages rappers H.B.O. (Homeboys Only) to perform the song but after an argument, H.B.O. leaves. Not knowing what to do, Dre convinces Eazy to record the song which he reluctantly agrees to. They record and release "Boyz-n-the-Hood", which becomes a smash hit. Music manager Jerry Heller approaches Eazy, who accepts his offer to manage the group.
In 1988, N.W.A performs "Dopeman", and Heller introduces them to Bryan Turner, a producer at Priority Records, which they sign up with. Eazy, Dre, Cube, Ren, Yella, and The D.O.C. commence writing lyrics and recording songs, such as "Quiet On tha Set" and "Express Yourself", for their debut album, Straight Outta Compton. During one of their recording sessions, the group is harassed by local police officers, which prompts Cube to compose and record "Fuck tha Police".
When the group goes on a national tour in 1989, the FBI demands that they stop performing "Fuck tha Police", declaring that it encourages violence against law enforcement, but they refuse, and the police raid their Detroit concert, resulting in riots and the group being arrested. Interviewed by the press, the group maintains that they did not start the riot, that their music was a reflection of their reality and that the First Amendment protected their free expression. Shortly after, Dre receives a call from his mother, explaining that Tyree was killed in a street fight.
Meanwhile, Heller has been delaying Ice Cube's contract. When Cube realizes that Eazy will be making more money than the other members, he leaves the group and signs with Turner. After his debut album AmeriKKKa's Most Wanted becomes a huge success, Cube becomes furious when Turner delays to pay him, and wrecks Turner's office. The rest of N.W.A, especially Eazy, becomes envious of Cube's success, and release the EP 100 Miles and Runnin', in which they diss Cube on the track "Real Niggaz", calling him Benedict Arnold. In turn, Cube makes a diss track, attacking N.W.A and Heller, which enrages Heller for its perceived anti-Semitism.
Following the release of N.W.A's second album, Niggaz4Life, and The D.O.C.'s near fatal car accident, Dre realizes that Heller is taking advantage of him and also leaves the group to form Death Row Records with Suge Knight. After this, Knight meets with Eazy so he can release Dre and D.O.C from their contract from Ruthless, but Eazy refuses, and Knight and his crew physically assault him. Dre enjoys his new found freedom and releases his debut album, The Chronic in 1992. Dre also begins producing tracks for other rappers, including Snoop Doggy Dogg and Tupac Shakur, though he questions Knight's violent behavior and lifestyle. Meanwhile, on April 29, 1992 a riot escalates in Los Angeles in the wake of the trial for the police beating of unarmed motorist, Rodney King.
With N.W.A. disbanded, Eazy and his girlfriend discover that Heller was embezzling money from the group, and Eazy fires him. In December 1994, he rekindles his friendship with Cube in New York City, and calls Dre to revive N.W.A. In February 1995, Eazy, Ren and Yella begin working on new material, but during the session, Eazy collapses from a seizure, and is taken to the hospital, where he is diagnosed with HIV/AIDS. The group members have emotional visits with him before his death on March 26, 1995. A year later, Dre meets with Knight and tells him that he is leaving Death Row to start his own label.
During the credits, it is shown that Cube still records music and has become a successful actor with films such as Boyz n the Hood, Friday (which was also directed by F. Gary Gray), xXx: State of the Union and Ride Along, and that, as a producer, Dre is responsible for the success of rappers Snoop Dogg, Tupac Shakur (who would later be killed in a drive-by shooting a year after Eazy's death), Kendrick Lamar, Eminem and 50 Cent. He also started Beats Electronics, which was bought by Apple in 2014 for $3 billion, the largest deal in Apple's history.