In 2084, Doug Quaid is a mild-mannered construction worker on Earth who dreams of exploring the human colonies of Mars. He opts to visit “Rekall,” a company that specializes in implanting False memories of a virtual trip to any location. Quaid pays for a Mars experience, including aspects of being a secret agent and discovering alien artifacts. When Rekall attempts to implant the memories, they find he already appears to have undergone a previous memory replacement procedure. Believing himself to be a secret agent whose cover has just been blown, before the Rekall memory has been implanted, Quaid attacks the medical staff until he is sedated and sent home.
Quaid arrives and suddenly finds his former friends and his wife, Lori, are out to kill him. He is able to subdue Lori and learns that his life prior to the past two months are all false memories, and that she and his friends were there to keep track of him. Their marriage has also been false, as she is really the girlfriend of Richter, the man that has led the attacks on Quaid. Quaid escapes, pursued by Richter and Helm , and eventually encounters a man that claims to be a former friend and gives him a briefcase. A tool inside allows Quaid to remove a tracking device implanted in his skull, throwing Richter off track. The briefcase also contains a video of himself; however, this version calls himself Hauser, revealing that he used to do the "dirty work" for Mars administrator Vilos Cohaagen, but after he met a woman he realized he was playing for the wrong team. So to escape, he went undercover and implanted the Quaid personality to cover his tracks. The video insists that since he's watching a video of himself, Cohaagen has found him out. Now he needs to “get [his] ass to Mars,” so he can deliver the information stored in his head about Cohaagen to the authorities so that he can bring him down.
Quaid arrives at the Mars colony and avoids capture by Richter and Cohaagen's men. He discovers that, as Hauser, he has been here before, and reconnects with his lover Melina, a prostitute in the redlight area of Venusville, where poor radiation shielding has created a number of mutants. After hearing Quaid’s story, Melina refuses to have anything to do with him, after finding he has a wife. Returning to his hotel room, he is confronted by Lori and Dr. Edgemar, the leading researcher from Rekall. Dr. Edgemar claims that everything Quaid has experienced since leaving Rekall has been part of the false memories that have gone wrong, and that by taking a pill, they can restore his mind to normal. He is about to take the pill, but he kills Dr. Edgemar after seeing him sweating, then he spits out the pill. He is forced to run from Lori and several of Cohaagen’s soldiers; Melina arrives, having realized Quaid’s story is true, and helps Quaid to take down Cohaagen’s men. Lori attempts to stop their escape, but Quaid shoots her down, calling it 'a divorce.'
Fleeing the hotel from Richter and Helm, Melina explains that one of the mutants, Kuato, may have the ability to extract Hauser’s information from Quaid. Along with a taxi driver named Benny, the three escape from Richter and make their way to Kuato, who is the leader of the Martian rebels. A battle ensues when Richter, Helm and Cohaagen's men have a brawl with the Venusville residents, which results in the deaths of Helm, some of the Venusville residents and some of Cohaagen's men. In revenge for aiding in their escape, Cohaagen blocks Venusville and shuts down its ventilation system, slowly causing the denizens to die from lack of oxygen. Quaid, Melina, and Benny are found by Kuato’s forces, and Quaid is taken privately to see the mutant—a small humanoid form conjoined to another man. The mutant helps Quaid identify a giant alien artifact device that has been recently uncovered, and implores him to start it up. As Quaid learns this, they are attacked by Cohaagen’s forces, and Benny reveals himself to be a mole having led them to Kuato. Kuato is killed while Quaid and Melina are captured.
Quaid is taken to Cohaagen, who shows him another video by Hauser that reveals Hauser to be Cohaagen’s friend, and that he went through the false memory process in order to lead Cohaagen to the rebels without alerting their telepaths. Cohaagen orders that Hauser’s memories be restored in a Rekall device as well as wiping Melina’s mind, but the two manage to escape. They make their way to the site of the alien artifact, killing Benny, Richter, and the rest of his men in the process. The artifact is revealed to be a terraforming machine that has the ability to create oxygen for the citizens of Mars; but Cohaagen has no intention of ever activating it because if Mars had a breathable atmosphere, he would lose power and control of the planet. They enter the control room of the machine, Cohaagen arrives and attempts to stop Quaid by threatening to blow up the control room, but Quaid grabs the explosive charge and tosses it through a large vent, accidentally rupturing a wall exposed to the void of Martian Atmosphere. Cohaagen is dragged out and dies from asphyxiation and decompression on the planet’s surface, while Quaid is able to start the machine just before he and Melina are dragged out. Quaid and Melina are saved from death as the waves of breathable air sweep across the planet. As the citizens of Venusville and the colony find themselves safe and free of Cohaagen’s rule, Quaid and Melina kiss, with Quaid still wondering if this is still all part of his Rekall memories.