Dutch (Arnold Schwarzenegger
) and his elite commando team arrive in an unnamed Central American country. They meet a general, Phillips, whom Dutch has worked for in the past, and with a CIA agent, Dillon (Carl Weathers
), whom Dutch also knows. Dillon tells Dutch that a high-ranking "cabinet minister" traveling by helicopter nearby has gone missing in the jungle, presumably shot down by a rebel guerrilla group operating in the area. Dutch's team has been charged with going over the border and into rebel territory to rescue the man.
Dutch's team are dropped into the jungle by helicopter and they hike toward the rebel camp. En route, they find the downed helicopter. Dutch's tracker, Billy (Sonny Landham
), is able to determine that the rebels indeed took the cabinet minister away but another group of men also passed through, likely more American soldiers. Later, Billy senses something wrong nearby and finds the bodies of three men who have been flayed and hung upside-down. In a pile of entrails, another of Dutch's men, Mac (Bill Duke
), finds a set of dog tags. Dutch recognizes the name on them; Jim Hopper, a Green Beret. Dutch is puzzled and looks to Dillon for information; Dillon says he knows nothing about another team.
The team arrives at the rebel camp without being detected. Dutch and his team destroy the camp in an all-out assault and kill all the rebels. There are no hostages alive (Dutch sees a rebel execute one), however, Dutch finds a lone, terrified girl, Anna (Elpidia Carrillo
). They take her along as a prisoner. Dutch realizes they have been set up and confronts Dillon. Dillon confirms that Dutch and his team were merely pawns to destroy the camp and its men. With no choice, the team heads to the chopper pick-up point. However, unknown to Dutch, they are being tracked by an unseen enemy that sees their body heat signatures.
The team moves into a thickly forested valley where they plan to meet their extraction helicopter. Anna tries to escape the group and Hawkins (Shane Black
) follows. When he catches her a distorted, human-like figure rushes out of the jungle and kills Hawkins. The woman is left behind, terrified, uninjured and covered in Hawkins' blood. Dutch's Hispanic crew member, Poncho (Richard Chaves
), asks Anna what happened; all she can say is "the jungle came alive and took him." Dutch orders the others to find Hawkins' body, which is hanging from a tree nearby. They do not find him and while he scans the area, the team's largest man, Blaine (Jesse Ventura
), is hit twice by laser-like blasts of energy that blow out his chest. He falls dead and his friend, Mac, rushes to him. Mac sees a humanoid-like distortion that flashes green eyes. Mac opens fire with Blaine's minigun, firing thousands of rounds into the jungle. The rest of the team rushes to the spot and also open fire. After checking the area in front of them, Poncho tells Dutch that they didn't hit anything living. A close inspection of Blaine's wounds shows no signs of shrapnel or gun powder burns. When asked what he saw, a terrified Mac is unable to identify the enemy. Only Anna finds any evidence of the enemy; a green-glowing fluid on a large leaf.
In another part of the jungle, the distorted humanoid (Kevin Peter Hall
) sits down on a tree branch. The distortion turns out to be a high-tech camouflaging device that can bend light, creating the illusion of invisibility. The enemy has been wounded in the thigh, dripping the same sort of fluid Anna had found; it is the creature's blood. It uses a bizarre first-aid kit to dress its' wound. When it removes the bullet, it howls in pain, a sound heard by Anna.
Dutch has the team make camp for the night. Blaine's body is wrapped in his poncho. The perimeter is wired with flares and grenades. Mac is given first watch and reminisces about his dead friend. A noise alerts him and an dark shape falls on him. He stabs it repeatedly drawing the rest of the team to him. The enemy turns out to be a wild pig. In the aftermath, Billy informs everyone that Blaine's body is gone.
Dutch determines that their unseen enemy is not only killing them one by one but also methodically hunting them. The team constructs a trap from jungle vines which form a net and an elaborate system of tripwires. While they wait for their stalker to set off the trap, Anna talks of a legendary demon that had stalked her village in times of extremely hot weather. She says that men were found skinned and missing body parts. Dutch and Dillon think that the trap won't work without live bait so Dutch carefully walks out into the clearing among the tripwires. As he turns around, the trap goes off and something is tangled in the net. Laser blasts shoot from the net, hitting the trap's anchoring tree trunk, which detaches and swings into Poncho, hitting him square in the chest and severely injuring him. Dillon sees the distortion of the stalker's camouflage as it flees into the jungle. Mac instantly takes off after the creature over Dutch's orders for him to return, seeking revenge for Blaine. Dutch, Poncho, Billy and Anna all leave to meet the chopper, while Dillon runs after Mac.
Dillon finds Mac a short distance away. Mac has found their enemy camped out in a tree stand. The two agree on a plan to approach it silently and kill it. While crawling through the underbrush, Mac notices a three-pointed laser pattern on his arm and is killed when he exposes his head to his enemy. Dillon finds him dead a few minutes later. Dillon is attacked by the stalker, who fires a laser blast that severs one of his arms. Dillon tries to defend himself but is impaled on a large double blade.
Still moving toward the extraction site, the rest of the team cross a large tree trunk bridge. Billy, sensing the presence of the enemy, throws away his rifle and faces it alone, armed only with his machete. He is quickly killed. Dutch, Anna and Poncho stop, and Poncho is killed by a laser blast. Anna picks up a gun to shoot but Dutch kicks it away. Another laser blast hits Dutch's rifle, blowing it in half. Dutch yells for Anna to run to the helicopter and he crawls away. Dutch ends up sliding down a hill that drops him off a cliff into a river. Dutch swims to the other side and is resting on the muddy bank when his pursuer splashes down behind him. Dutch, weaponless and covered in mud, waits for his enemy to kill him. The enemy surfaces and turns out to be a large, humanoid alien possessing advanced weaponry. The adaptive camouflage device that concealed it from Dutch and his team appears to be malfunctioning due to exposure to water and the creature switches it off. It spots a target in the brush and tracks it with a three-beamed laser scope and shoots at it, a small rodent, with a shoulder-mounted cannon. The alien does not, however, see Dutch, whose body heat is insulated by the mud on his skin. The creature stalks off.
Dutch mounts an offensive, choosing a strategic spot and sets a garroting trap with spikes. Dutch also builds a bow and several arrows with gunpowder from his spare grenades and fashions spears. He also covers himself in mud to further his advantage. Meanwhile, the creature rips the spinal column and skull from Billy's corpse, cleaning it to make a trophy. We see the skulls of several other humans among its collection.
When he's ready, Dutch lights a large bonfire and sounds out a primitive yell, summoning the alien. The alien arrives and crawls over the unseen Dutch. Dutch fires one of his explosive arrows at the creature, permanently disabling its invisibility device. However, Dutch rapidly runs out of weapons. The alien captures him in a pond. After a brief examination of his human opponent, the creature removes its helmet, revealing its face: deep set eyes, a bald head, dreadlocks, and a fang-filled mouth with huge mandibles. It then engages Dutch hand-to-hand, a battle where the alien has the advantage of strength over Dutch. Dutch draws the creature into the spiked trap he'd set, yelling for it to come closer to kill him. The creature discovers the trap and walks around behind Dutch. As it moves in, Dutch notices it's standing directly under the trap's counterweight; Dutch kicks away the trigger and the counterweight plummets, crushing the alien. Dutch moves in to finish it off with a large rock but throws it away when he sees that the alien is already wounded fatally. Dutch asks "What the hell are you?" and the creature repeats the phrase. It opens a panel on its' gauntlet and activates a timer, signaling Dutch to run. As he does, the creature laughs, imitating Billy. A small nuclear explosion goes off as Dutch leaps to cover.
In a helicopter flying nearby, General Phillips (R.G. Armstrong
) and Anna see the explosion. They see Dutch in an incinerated patch of rainforest. Dutch is recovered, looking physically exhausted.