During the present, Worthington Labs announces it has developed an inoculation to suppress the X-gene that gives mutants their abilities and makes them different from other humans, offering the "cure" to any mutant who wants it. The cure is created through the genome of a young mutant named Jimmy, who lives at Worthington facility on Alcatraz Island.
Horrified by the announcement of what he considers a way to forcefully used to exterminate the mutant race, Lensherr, now known as the X-Men's adversary Magneto, reforms his Brotherhood of Mutants with mutants who oppose the cure. Meanwhile, Cyclops, still emotionally distraught about the loss of girlfriend Jean Grey, drives to her resting location at Alkali Lake. Jean appears to Cyclops, but as the two romantically kiss, Jean starts disintegrating her lover. Psychically sensing trouble, Professor X sends Wolverine and Storm to investigate. When they arrive, the two X-Men encounter telekinetically floating rocks, Cyclops' glasses, and an unconscious Jean. Cyclops himself is nowhere to be found. When they return to the X-Mansion, Xavier explains to Wolverine that when Jean sacrificed herself, she unleashed the powerful alternate personality she calls "Phoenix", which Xavier had previously telepathically repressed fearing the Phoenix's destructive potential. Wolverine is disgusted to learn of this psychic tampering of Jean's mind, but once she awakens, Wolverine realizes she had killed Cyclops and is not the Jean Grey he knew. The Phoenix awakens, knocks out Wolverine and escapes to her childhood home.
Since Magneto had learned from the resurgence of Jean through his cohort Callisto, the X-Men arrive at the Grey home at the same as the Brtoherhood. Magneto and Xavier vie for Jean's loyalty until the Phoenix resurfaces. She destroys the house and disintegrates Xavier before leaving with Magneto. The Brotherhood then decides to strike upon Worthington Labs, with Magneto using his powers to dislocate the Golden Gate Bridge and connect Alcatraz to the San Francisco mainland and facilitate the attack. The X-Men then decide to regroup and confront the Brotherhood, despite being significantly outnumbered, and arrive just as the military troops who had been thus far neutralizing the attacking mutants start being overwhelmed by the Brotherhood.
During the fight, Beast injects Magneto with the cure, nullifying his powers, and Kitty Pryde saves Jimmy from the murderous Juggernaut. Afterwards army reinforcements arrive, and once they attack Jean the Phoenix awakens, using her powers to obliterate the troops. As the Phoenix's attacks are destroying the facilities and mutants at Alcatraz, Wolverine realizes that due to his healing factor, he is the only one who can approach the Phoenix. After Wolverine comes near her, Jean momentarily gains control and begs him to save her. Wolverine then stabs Jean, stopping the devastating force but causing Wolverine to mourn the death of the woman he loved.
Some time later, Xavier's school is still operating with Storm as headmistress, and Magneto is retreating in San Francisco. As he gestures towards a metal chess piece, it wobbles slightly, implying his powers are returning. In a post-credits scene, Dr. Moira MacTaggert checks on a comatose patient who greets her with Xavier's voice.