Twenty years ago, Xavier and Magneto are still working together to bring new mutants to the School for the Gifted, and meet with a teenage Jean who shows tremendous telekinetic abilities beyond anything she showed before. Ten years later, Warren Worthington III develops a mutant power of wings which he tries to cut off, but his anti-mutant father discovers him.
Back in the “not too distant future,” mutants have started to become more accepted by human society, including the ape-like Hank “Beast” McCoy joining the government as the Secretary of Mutant Affairs. Homeland Security Secretary Bolivar Trask reveals to him that Mystique was captured robbing the FDA, and they’re less concerned about holding her than what she was there to take.
Hank visits the X-Men and reveals Worthington Pharmaceuticals has created a “cure” for mutants which will permanently take away their powers, and while some like Rogue are happy at the idea (especially since Iceman’s eye seems to be straying to new student Kitty Pryde, whose powers allow her to phase through solid matter, and someone he can actually touch), most at the school are strongly opposed. After the meeting Hank meets Jimmy, a mutant who removes the powers of any other mutant that comes close to him, who is the source of the cure. Warren is also set to be the first mutant to take the cure, but at the last minute he refuses and uses his wings to escape, embracing his true identity as Archangel.
Magneto and Pyro interrupt a meeting of other mutants debating the cure, and he cows them all with a speech about how it will inevitably be forced on them all. He also meets Callisto, who can track down other mutants, and employs her to find Mystique. They attack the prison convoy and also free James “Multiple Man” Madrox and Cain “Juggernaut” Marko. But one of the guards tries to shoot Magneto with the cure, and Mystique takes the hit. Upon seeing she’s become human, Magneto coldly abandons her.
Cyclops has been hearing Jean’s voice calling his name and finally returns to Alkali Lake, where he’s stunned to see her emerge unharmed from the water. They kiss, but suddenly Scott’s face grotesquely contorts. Wolverine and Storm head to the lake and find Cyclops vaporized. When they bring Jean back, Xavier reveals that when he first met her, he was so worried about the extent of her powers that he locked their full strength into her subconscious, where they developed into an alternate personality named Phoenix. Wolverine is alone with her when Phoenix wakes up and seduces him. Jean briefly takes over and begs Wolverine to kill her, but he can’t do it and soon Phoenix comes back and escapes.
Phoenix returns to her old home, and Magneto arrives at the same time as Xavier thanks to Calisto sensing her. They both make their cases for Phoenix to come with them, which only enrages her and causes her to lift the whole house up, before disintegrating Xavier and leaving with Magneto. Back at the school, the remaining X-Men are considering closing it down for good until Archangel arrives, reminding them it can still serve a purpose. Rogue also leaves to get the cure, and while Iceman looks for her, he runs into Pyro who blows up a Worthington building as Magneto’s first blow in the war.
Wolverine receives a psychic message from Jean that leads him to Magneto’s base in Muir Woods, where he hears the group’s plan to attack Worthington’s home base on Alcatraz before being caught and thrown miles away by Magneto. As he returns to alert the other X-Men, Mystique approaches the government and reveals everything to them in revenge for her abandonment. But by the time the military gets there, Magneto’s group have all left except for a decoy by Multiple Man.
Magneto launches his attack by flying the Golden Gate Bridge onto Alcatraz with his entire army onboard. The human security initially makes a good showing thanks to plastic weapons loaded with the cure, but the army’s powers eventually overwhelm them. Then the X-Men arrive and fight against the overwhelming odds, including Kitty saving Jimmy from Juggernaut, Storm killing Calisto with a lightning bolt, Archangel saving his father from being thrown off a roof, and Iceman icing up his whole body to defeat Pyro. Finally, Wolverine goes up against Magneto, who takes control of him as usual. But this time it’s just a distraction so Beast can inject him with the cure. It’s still not over as Phoenix unleashes her full powers and starts killing people on all sides. Wolverine uses his healing to resist her attempts to disintegrate him long enough to get close, where Jean briefly breaks through and begs him to save her. He does so the only way he can, stabbing her in the chest.
In the aftermath, the cure is being given out to any mutants who want it, including Rogue, who gladly takes Iceman’s hand for the first time. Beast is appointed a liaison to the United Nations, opening hope for a new peace between human and mutant. And a now depowered Magneto sits alone in a park with a chess set like he used to play with Xavier. He tries to use his power on the pieces, and one actually seems to slightly move.
The Stinger: In a hospital, Xavier’s old colleague Moira visits a comatose patient, who suddenly greets her with Xavier’s voice.