In 2084, construction worker Douglas Quaid is having troubling dreams about Mars and a mysterious woman there. His wife Lori dismisses the dreams and discourages him from thinking about Mars, where the governor, Vilos Cohaagen, is fighting a rebellion. Quaid visits Rekall, a company that provides memory implants of vacations, opting for a memory trip to Mars as a secret agent. However, something goes wrong during the procedure, and Quaid starts revealing suppressed memories of actually being a secret agent. The Rekall employees sedate him, wipe his memory of the visit, and send him home. On the way, Quaid is attacked by his friend Harry and other men, and is forced to kill them. He is then ambushed in his apartment by Lori, who states that she isn’t his wife; their marriage is a false memory implant, and “The Agency” sent her to monitor Quaid. Quaid knocks Lori out and runs off, pursued by armed men led by Richter, Cohaagen’s operative and Lori’s real husband.
After evading his attackers, Quaid is left a suitcase containing money, gadgets, fake IDs, and a video recording. The video is of Quaid himself, who identifies himself as Hauser and explains that he used to work for Cohaagen, but switched sides after learning about an alien artifact on Mars and underwent the memory wipe to protect himself. Hauser instructs Quaid to remove a tracking device located inside his skull before ordering him to go to Mars. On arrival, Quaid finds a note from Hauser directing him to Venusville, 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 he is from Rekall and was implanted in Quaid, asserting that he suffered a “schizoid embolism” and is trapped in a fantasy from the implanted memories. His solution is to take an offered pill to wake up, or he will otherwise be lobotomized. Seeing sweat on Edgemar’s face and realizing he isn’t an implant, Quaid refuses the pill and shoots him, just as Richter’s men burst into the room. Led by Lori, the men capture Quaid. Melina arrives to aid Quaid, recognizing Quaid to be truthful, and in their escape Quaid kills Lori.
They flee to Venusville with Benny, and are ushered into a secret tunnel. Unable to locate Quaid, Cohaagen shuts down the ventilation, slowly asphyxiating its citizens. Quaid, Melina, and Benny are taken to a resistance base, and Quaid is introduced to the mutant Kuato, conjoined to his brother George. Kuato reads Quaid’s mind recalling a discussion with Cohaagen and Richter about the Martian artifact and its unknown purpose. Cohaagen’s forces burst in and kill most of the resistance. Quaid, George/Kuato, Melina & Benny escape to an airlock. Benny kills George and reveals that he works for Cohaagen. Kuato implores Quaid to activate the reactor before being shot by Richter.
Quaid and Melina are taken to Cohaagen, who explains that the Quaid persona was a ploy by Hauser to fool the mutants’ psychic abilities, infiltrate the mutants and expose Kuato, thereby wiping out the resistance. Cohaagen orders Hauser’s memories to be reimplanted in Quaid and Melina re-programmed as Hauser’s obedient “babe”, but Quaid and Melina 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 starting the reactor will destroy them all. Melina arrives and shoots Cohaagen, but he starts the bomb timer. Quaid throws the bomb down the tunnel, blowing the door open and causing an explosive decompression. Quaid pushes Cohaagen aside, and Cohaagen is blown out onto the 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 from a mountain and forms a breathable planetary atmosphere, saving Quaid, Melina, Venusville, and the rest of Mars’ population. As the Mars humans and mutants stand on an outcropping looking at the newly blue sky, Quaid momentarily pauses to wonder whether he is dreaming or not, before turning to kiss Melina.