In 2084, construction worker Douglas Quaid is having troubling dreams about Mars and a mysterious woman there. His wife Lori is dismissive of Mars, where the governor, Vilos Cohaagen, is fighting a rebellion. Quaid visits Rekall, a company that implants false memories of vacations, and chooses a "trip" to Mars as a secret agent. However, the procedure goes wrong because Quaid has suppressed memories of actually being a secret agent on Mars.
The Rekall employees sedate him, wipe his memory of the visit, and send him home. On the way, Quaid is attacked by his work colleague Harry and other men, and is forced to kill them. At home, Lori attacks him, stating that their marriage is a false memory implant, and "the Agency" sent her to monitor Quaid. Quaid incapacitates Lori and runs off, pursued by armed men led by Richter, Cohaagen's operative and Lori's real husband.
After evading his attackers, Quaid is given a suitcase containing money, gadgets, fake IDs, and a video recording in which Quaid identifies himself as Hauser and explains that he used to work for Cohaagen, but switched sides after learning about an alien artifact on Mars, undergoing the memory wipe to protect himself. Hauser instructs Quaid to remove a tracking device located inside his skull and orders him to go to Mars. On arrival, Quaid finds a note from Hauser directing him to Venusville, a red light district populated by people mutated as a result of poor radiation shielding. He meets Benny, a taxi driver, and Melina, the woman from his dreams, but she spurns him, believing that he is still working for Cohaagen.
Quaid later encounters Rekall's Dr. Edgemar and Lori. Edgemar states that due to a "schizoid embolism", Quaid is trapped in a fantasy from the implanted memories: he had himself and Lori inserted into the fantasy and offers a "pill" that will signal Quaid to wake up. Seeing Edgemar sweating, Quaid realizes he is real and kills him. Richter's men burst into the room and capture Quaid, but Melina arrives and attacks the men. Quaid kills Lori and escapes with Melina.
They flee to Venusville with Benny, and are ushered into a secret tunnel. Unable to locate Quaid, Cohaagen shuts down the area's ventilation, slowly asphyxiating everyone. Quaid, Melina, and Benny are taken to a rebel base where Quaid is introduced to their leader, the mutant Kuato who is conjoined to his brother George. Kuato reads Quaid's mind, recalling a discussion with Cohaagen and Richter about the Martian artifact and its purpose. Cohaagen's forces burst in and kill most of the rebels. Quaid, George/Kuato, Melina, and Benny escape to an airlock, but shockingly, Benny kills George and reveals his alliance with Cohaagen. Before dying, Kuato implores Quaid to activate the alien reactor.
Quaid and Melina are taken to Cohaagen, who plays another video, in which Hauser explains that the Quaid persona was a ploy to fool the mutants' psychic abilities, infiltrate the mutants, and expose Kuato, thereby wiping out the rebellion. Cohaagen orders Quaid reimplanted with Hauser's memories and Melina reprogrammed as his obedient "babe", but they escape into the mines where the reactor is located. Benny attacks them in an excavation machine, but Quaid kills him. Quaid and Melina then outwit and kill Richter and his men lying in ambush for them.
Quaid reaches the reactor control room, where Cohaagen is waiting with a bomb, claiming that starting the reactor will destroy them all. Melina arrives and shoots Cohaagen, but he starts the bomb timer. Quaid throws the bomb down a tunnel, leading to an explosive decompression. Quaid pushes Cohaagen aside, who is blown out onto the Martian surface, where he suffocates and dies. Quaid manages to activate the reactor before he and Melina are also blown out.
The reactor rods deploy, sublimating the turbinium glacier underneath and releasing gas, which bursts to the surface and forms a breathable planetary atmosphere. Quaid and Melina manage to survive their brief decompression. With the new breathable atmosphere, Venusville and the rest of Mars' population are saved. As everyone beholds the newly blue sky, Quaid momentarily pauses to wonder whether he is dreaming or not, before turning to kiss Melina.
