In the opening monologue, Princess Irulan (Virginia Madsen), explains that after the fall of the machine titans and the reclaiming of the universe by humans, the people established training programs to gain knowledge they had lost in their apathy. The two training regimens, each gender specific, enabled humans to establish knowledge in math and psychic abilities. The known universe is dominated by the presence of the spice Melange which extends life. The Galactic Spacing Guild and its prescient alien Navigators use the spice to "fold space" and safely guide interstellar ships to any part of the universe instantaneously. It exists in only one place: the desert planet of Arrakis, also known as Dune. The inhabitants of Dune, the nomadic people called the Fremen, have a legend that tells of the coming of a messiah from another world.
The year is 10,191. Sensing a potential threat to spice production, the Guild sends a Navigator emissary to the planet Kaitain, the capital and home world of the Emperor of the known universe Shaddam IV (Jose Ferrer) and demand an explanation. The Emperor confidentially shares his plans to destroy one of the royal houses, House Atreides. The popularity of Duke Leto Atreides (Jurgen Prochnow) has grown, and he is suspected of amassing a secret army with a weapon technique using sound (sonic weapons called Weirding Modules), making him a threat to the Emperor. Shaddam's plan is to give the Atreides control of the planet Arrakis to mine the spice, then have them ambushed by their longtime enemies, the Harkonnens. The Navigator commands the Emperor to kill the Duke's son, Paul Atreides (Kyle MacLachlan), a young man who dreams prophetic visions of his purpose. The order draws the attention of the Bene Gesserit sisterhood (a training institution for women), as Paul is tied to their centuries-long breeding program which seeks to produce the superhuman Kwisatz Haderach. The Reverend Mother, Gaius Helen Mohiam (Sian Phillips) serves as an advisor to the Emperor, and plans a visit to meet with Paul.
On the planet Caladan, watery home world of the House of Atreides, Paul cannot understand why the Harkonnens would have given up their presence on Arrakis to the Atreides, but understands that the family must go there: Thufir Hawat (Freddie Jones), a member of the Mentats or human computers trained in pure mathematics, tells Paul they are going because of the promise of a new army. Paul's tutor and mentor Gurney Halleck (Patrick Stewart), tests him in the limits of hand-to-hand fighting in preparation for his manhood trials, and discusses Paul's amazing abilities with Thufir.
Paul's mother, Lady Jessica (Francesca Annis), is also a member of the Bene Gesserit, and serves as Duke Leto's concubine. The Reverend Mother arrives on Caladan to test Paul. Jessica is worried that her son may not live through the test. Mohiam tells Paul about the Water of Life, bile from the giant Arrakis worms, which no man has ever drunk and survived. Only the Kwisatz Haderach, the true messiah, in whom the Freman inhabitants believe, can drink it. With a deadly gom jabbar at his throat, Paul is forced to place his hand in a box which subjects him to excruciating pain, but he resists the urge to withdraw his hand (which would result in death) and passes the test to Mohiam's satisfaction.
Meanwhile, on the planet Geidi Prime, the industrial homeland world of the House of Harkonnen, the physically sick, deformed and sadistic Baron Vladimir Harkonnen (Kenneth McMillan) plans his personal revenge against House Atreides by finding a traitor who will kill the Duke. He assigns his nephews Glossu Rabban (Paul Smith) and Feyd-Rautha (Sting) the task of crushing the House of Atreides.
Upon arrival on Arrakis, Leto is informed by one of his right-hand men, Duncan Idaho (Richard Jordan), that the Fremen have been underestimated, as they exist in vast numbers and could prove to be powerful allies. Paul and Leto meet with Dr. Kynes (Max von Sydow) a spice mining leader who takes them by aircraft to a remote area where they witness a giant worm attack a mining ship. Faced with the destruction of the mining facilities, Duke Leto orders the place evacuated rather than save the spice ore, and even saves many of the workers by bringing them on their shuttle before the facility is destroyed, earning him the trust and recongition of Dr. Kynes and the rest of the Freman workers. But before the Duke can establish an alliance with them, the Harkonnens launch their attack against Arrakis.
While the Atreides had anticipated a trap, they are unable to withstand the Harkonnen attack which is aided by the Emperor's elite troops, the Sardaukar, and a traitor within House Atreides itself, Dr. Wellington Yueh (Dean Stockwell). Yueh plans revenge on the Baron for the death of his wife. Captured, Leto dies in a failed attempt to assassinate the Baron Harkonnen using a poison gas capsule planted in his tooth by Dr. Yueh; With his vision fogged by drugs, Leto kills the Baron's aide Piter De Vries (Brad Dourif) instead. With Piter dead, Captain Iakin Nefud (Jack Nance), the Baron's head of security, takes over as duities as his personal valet and aide. Dr. Kynes is captured and killed by the Baron himself. Thufir is forced to take over as director of the spice mining for the Harkonnens while Rabban becomes de facto governor of Arrakis.
Jessica, who is pregnant by Duke Leto, and Paul escape into the deep desert, where they manage to join a band of Fremen led by Stilgar (Everett McGill). Paul adopts the title of Muad'Dib, and the Freman suspect he is the leader they have been waiting for. Paul teaches the Fremen how to fight use the Weirding Modules and begins targeting mining production of spice to stop its flow. Stilgar trains Paul in Fremen traditions, and Paul rides his first sandworm. The Freman's Bene Gesserit reverend mother has aged and Jessica drinks the Water of Life to replace her. The poisonous water causes her to go into convulsions and premature labor, her eyes bleed, and the transmutation of the sacred water awakens her knowledge. Jessica's daughter Alia (Alicia Witt) is born prematurely, but has the same blue tinted eyes because of the spice and the knowledge imparted by the Water of Life. Within two years she grows rapidly into a young girl with great powers.
During the war against the spice Guild, The Freman, with Paul as their leader, effectively halt spice production on Arrakis. The Guild warns the Emperor that he must intervene; they fear Paul will take the Water of Life. During a skirmish, Paul meets his former mentor Gurney Halleck, now a smuggler who surrenders to them and immediately joins Paul and the Freman to continue the war against the spice flow. In the meantime, Paul begins a romance with Chani (Sean Young), the daughter of the leader Dr. Kynes (known to the Freman as Liet). After a vision, Paul can no longer see his future and decides to drink the Water of Life.
Paul takes to an area of desert with Chani and a cadre of bodyguards, drinks the Water of Life and enters a coma-like state. Awakening literally and figuratively, he is transformed and gains control of the sandworms of Arrakis and the secret of the spice. He has discovered that water kept hidden in huge caches by the Fremen can be used to destroy the spice. Paul has also seen into space and the future; the Emperor is amassing a huge invasion fleet above Arrakis to regain control of the planet and the spice.
Upon the Emperor's arrival at Arrakis, he executes the incompetent Rabban for failing to remedy the spice situation. Alia is brought in as a hostage, and she brings them a message about Paul coming for them. Paul launches a final attack against the Harkonnens and the Emperor at the capital city of Arrakeen, with he and the Freman riding sandworms. After a climatic and fierce battle, where casualties are heavy on both sides, Paul and the Fremen warriors defeat the Emperor's legions of Sardaukar, while Paul's sister Alia sends Baron Harkonnen into the jaws of a sandworm.
Afterwords, Paul, Stilgar, Gurney, Alia, Jessica and their army confront the captive Emperor, Princess Irulan and their staff, and Paul is challenged to a duel with daggers by the psychotic Feyd. After a short but brutal fight, Paul stabs Feyd in the neck and uses his vocal powers to explode his body internally, killing him. Paul faces the defeated Emperor, relieves him of power and announces an era of peace for all of humanity. After this, storm clouds gather and it begins raining on Arrakis for the first time in the planet's existence. Alia declares, "And how can this be? For he is the Kwisatz Haderach!"