In 1845 Canada, young James Howlett sees his father killed by groundskeeper Thomas Logan. The trauma activates the boy's mutation: bone claws protrude from James' hands, and he kills Logan. With his dying breath, Logan tells James that he is James' real father. James flees with Victor Creed, the abused son of Thomas Logan who is thus James' brother. The two spend the next century as soldiers, putting their violent urges and skills to use by fighting as US soldiers in the American Civil War, both World Wars and the the Vietnam War. In Vietnam, James kills a superior officer after he comes to stop Victor from raping a local villager. Despite his clear objections to Victor's actions, James defends his brother, and the two are sentenced to execution by firing squad, which they survive. Major William Stryker approaches the two men, now in military custody, and offers them membership in Team X, a group of mutants including marksman Agent Zero, mercenary Wade Wilson, teleporter John Wraith, invincible Fred Dukes and electrokinetic Chris Bradley. They join the team, but the group's questionable actions and disregard for human life cause James to leave.
Six years later, James — now going by the name Logan — is living in Canada with his girlfriend, Kayla Silverfox. Colonel Stryker locates Logan and warns him that someone is killing members of the team, as both Wilson and Bradley are dead. Shortly afterward, Victor murders Kayla and brutally beats Logan. Stryker offers Logan a way to beat Victor. Logan undergoes an operation to reinforce his skeleton with adamantium, a virtually indestructible metal. Before the procedure, Logan asks for new dog tags inscribed with "Wolverine"-- based on a story that Kayla told him. Once the procedure is successfully completed, Stryker orders Logan's memory to be erased, but Logan overhears thanks to his supernatural hearing and fights his way out, with former team member Zero tracking him. Logan takes refuge in the barn of an elderly couple who take him in for the night. Early the next day Zero murders the couple and attacks Logan with two humvees and a helicopter. Logan fights back and kills Zero and his soldiers.
Logan locates Wraith and Dukes and asks them about the location of Stryker's new laboratory, referred to as "The Island." Dukes, now severely obese, explains that Stryker is performing experiments on mutants, and that Victor is aiding him in capturing new subjects. One of them, Remy LeBeau ("Gambit"), escaped and hence knows the location of The Island. Wraith and Logan locate Gambit in New Orleans, and ask for the Island's location, but Gambit suspects Logan was sent to recapture him and attacks him. Meanwhile, Victor kills Wraith and takes a sample of his blood for Stryker. Upon being thrown out of the building by Gambit and discovering the murder scene, Logan attacks Victor and, with his enhanced strength, almost kills him. However, Gambit interrupts the fight, allowing Victor to escape. After being convinced of Logan's intentions, Gambit takes him to Stryker's facility on Three Mile Island. There, Logan learns that Kayla is still alive and was conspiring with Stryker the whole time in exchange for her abducted sister's safety, but did not yet know that she still genuinely loved him. Feeling hurt and betrayed, Logan leaves, enraging Victor at being denied the chance to fight Logan that he wanted. When Victor demands the adamantium bonding promised for his service, Stryker refuses on the basis that he will not survive the procedure. A berserk Victor attempts to kill Kayla when she tries to persuade him Stryker has betrayed them both, but Logan hears her screams and returns. Logan easily defeats Victor and nearly kills him but stops when Kayla reminds him of his humanity. Logan then agrees to help Kayla free the imprisoned mutants.
Stryker activates his Weapon XI, a "mutant killer" super-soldier with the abilities of other mutants. Logan holds Weapon XI off while the escaped mutants flee. The mutants escape through the facility's tunnels, guided by a young blinded Scott Summers who is following a voice in his head. The party is greeted by Professor Charles Xavier, who offers them shelter at his school. Kayla, mortally wounded in the escape, decides to stay. Logan lures Weapon XI to fight on top of one of the plant's cooling towers, where he is almost killed until Victor arrives. Together, they battle Weapon XI and manage to decapitate him. Victor then departs, vowing to one day finish what they have started, and Logan is saved from the collapsing tower by Gambit. As Logan carries Kayla to safety, Stryker shoots Logan in the forehead with adamantium bullets, rendering him unconscious. Silverfox uses her powers of persuasion to order Stryker to keep walking till his feet bleed and then continue walking, before dying from her injuries. Gambit returns, but the brain damage causes Logan not to remember anything. As the police and ambulances arrive, Gambit tries to convince Logan to come with him, but he declines, wanting to go his own way. Gambit and Logan run opposite ways as the emergency vehicles respond to the devastated cooling tower.