Gwen, Patrick, Melanie, and brothers JD and Brax, arrive by airplane at Fantasy Island after winning a contest. They are greeted by resort worker Julia, and speculate about how the resort will fulfill their fantasies. The island’s proprietor, Mr. Roarke, arrives and explains that each of them will be given one fantasy and that they must see it through to its conclusion, even if its result is not as the wisher intended. Roarke then guides the guests to their wishes.
JD and Brax are taken to a mansion where they become the guests of honor at a party thrown by gorgeous models. After much partying, armed men storm the mansion and take the brothers hostage. The mansion had belonged to a drug dealer and the men are looking for money and illicit drugs.
Patrick, a police officer, is given a chance to live out his fantasy of serving in the military. However, he is soon captured by American special forces commandos who disbelieve his story. The commandos are on a mission to rescue American citizens being held hostage. They introduce him to their commander, who Patrick recognizes as his father. He realizes that he is taking part in the mission which lead to his father’s death when Patrick was a child.
Roarke gives Gwen the chance to correct her greatest regret: turning down her boyfriend Allen’s marriage proposal five years earlier. She is transported back to the restaurant where Allen proposed. This time she accepts his proposal and suddenly finds herself vacationing with Allen and their daughter.
Melanie is shown to an underground torture chamber where Sloane, a girl who had mercilessly bullied her in high school, is tied up. Melanie tortures Sloane, including posting a video of Sloane’s infidelity on social media where her husband can see it. But when Melanie sees a video of Sloane being abducted, she realizes that this is all real and helps free her. The two of them escape from a demented surgeon named Dr. Torture and flee into the jungle.
The individual fantasies begin to converge. Brax manages to get into the mansion’s armory and hold some of the drug dealers hostage with a grenade. Patrick manages to convince his father of his identity, and the team arrives at the mansion where they kill the drug dealers and rescue Brax. However, JD is shot and killed.
Melanie and Sloane confront their past and reconcile. They are then rescued by Damon, a private investigator who has been stuck on the island since he came there to investigate it. He shows them to an underground grotto with a magical stone which can show people their fantasies. The water in the grotto can grant fantasies when it is drunk. Damon tells them that he has a pilot waiting nearby and gives them a phone number to call for rescue. Damon is killed by the relentless Dr. Torture, but the two women escape and return to the torture chamber where they phone for the rescue plane. There they reunite with Brax and Patrick who entered while searching for Roarke.
Gwen becomes dissatisfied with her fantasy. Roarke explains that he is living out his own fantasy of being reunited with his wife, Julia, who had died while they were searching for the island. To keep her real, he must remain on the island forever. Gwen realizes that her greatest regret is not rejecting Allen’s proposal, but an event six years ago where she failed to save her neighbor Nick from a fire which she had accidentally started. The island takes her back in time to the night of the fire where she sees that Brax and JD also lived in the apartment and Patrick was a police officer who responded but who ignores her pleas to help save Nick. Gwen tries to rescue Nick but is overcome by smoke and must be rescued by Julia. Reuniting with the other guests, they flee into the jungle to avoid Roarke and his men.
Gwen realizes that they are all connected to Nick somehow, with Melanie having been a classmate of his who had agreed to a date with him but then changed her mind. They realize that someone brought them there for a revenge fantasy, with Melanie speculating that Julia might be Nick’s mother. Melanie takes them down into the caverns, where the group becomes separated. Patrick is ambushed by his fantasy and Sloane confronts a manifestation of her cruel younger self, which she decisively rejects. The drug dealers and Dr. Torture arrive, taking everyone hostage. Melanie explains that this is really her fantasy. She had made a special connection with Nick, and had been supposed to go on a date with him that night, finally overcoming her crippling self esteem issues, and had been devastated when she saw that he died.
Roarke arrives and says that he cannot stop Melanie’s fantasy, but reminds them that anyone who drinks the water will be granted a fantasy. Sloane drinks the water and reveals her fantasy: that Melanie and Nick should be together forever. Nick’s charred corpse emerges and pulls Melanie into the water. With her fantasy ended, the drug dealers and Dr. Torture disappear. Before Melanie is drowned, she lobs the grenade thrown in the water at the remaining guests, but Patrick throws himself onto it before it detonates. Sloane, Gwen, and Brax wake up at the resort and are told by Roarke of Patrick’s death. The remaining guests make headway to the plane to travel back to the mainland. Roarke informs Brax that he had merely partaken in his brother’s fantasy and had not been granted one of his own. Brax decides that his fantasy is for his brother to be alive and return to the outside world. JD appears in the plane, which departs. Roarke warns Brax that for the fantasy to last, Brax must remain on the island forever. Brax agrees to remain as Roarke’s new assistant and, based on an old college nickname, is given the name Tattoo.