New York City, 1985. Bud Fox (Charlie Sheen) is an ambitious, young junior stockbroker at Jackson Steinem & Co. a local Wall Street stock and trading firm, desperate to get to the top. He wants to become involved with his hero, the corporate raider Gordon Gekko (Michael Douglas), a ruthless and legendary Wall Street player.
After work, Fox's meets with his father Carl (Martin Sheen), at a bar in nearby Queens for drinks. Carl Fox is a blue-collar maintenance foreman for a small and struggling airline company called Bluestar Airlines. In a casual conversation, Carl tells Bud that the Federal Aviation Authority (FAA) has cleared Bluestar of responsibility for a major incident in which it was involved.
Some days later, Bud Fox visits Gordon Gekko on his birthday and, granted a brief interview, pitches him stocks of a few promising companies, but Gekko is unimpressed. Realizing that Gekko may not do business with him, a desperate Fox provides him with the information about Bluestar which the FAA has yet to make public. Gekko tells him he will think about it. A dejected Fox returns to his office where Gekko places an order for Bluestar stock, becoming one of Fox's clients.
Over the next few weeks, Fox makes more stock deals with Gekko which fall through, but the corporate raider has taken a liking for the young man and takes him under his wing. However, Gekko makes it clear that he does not want just a few tips on the stock market: he wants inside information of the sort that should be confidential, obtained by any means necessary, even if it involves using unethical and illegal methods. Desperate to advance in life, Fox agrees.
One of his first assignments is to spy on British corporate raider Sir Lawrence Wildman (Terence Stamp) and discern his next move. By following Wildman through New York, Fox discovers that he is out to take control of a major steel company, Anacott, in Pennsylvania and informs Gekko who leaks the news to the press and then and buys the controlling shares.
On that weekend, Gekko invites Fox to his house on the Hamptons in Long Island where Fox gets a look at the corporate raider's family life and gets to meet his wife Kate (Sean Young), the mother of Gekko's two-year-old son Rudy and infant daughter. Fox also has a run-in with an attractive blond lady who introduces herself as Darien (Daryl Hannah). Over drinks, Darien tells Fox that she works as an interior decorator in New York and she knows Gekko because he is a frequent client of hers and has done work on his house and city apartment. Fox asks Darien out on a date for later, and she agrees to one. A little later, Wildman arrives uninvited and confronts Gekko about the takeover of the steel company. Wildman claims that he is not out to "asset strip" the steel company but to improve its infrastructure and make something of it. After trading some personal insults, the two men agree to a deal where Gekko will sell it back to Wildman for a large cost.
Over the next year, Fox's star is on the rise. He makes good money and enjoys Gekko's perks, including purchasing a penthouse on Manhattan's Upper East Side and Darien becomes his trophy live-in mistress. However, it is hinted that Darien is a former lover of Gekko's. Still employed by Jackson Steinem, Fox is promoted as a result of the large commission fees he is bringing in from Gekko's trading and is given a corner office with a view. He continues to maximize insider information, going so far as disguising himself as a cleaning company supervisor and breaking into the offices of lawyers and businesses after hours in order to obtain necessary data.
Fox believes that the Bluestar Airlines can be improved and made a commercial success. He persuades Gekko to buy Bluestar and expand it using savings achieved by union concessions. The union leaders, including Fox's father Carl, are invited to Fox's apartment in order to discuss the proposal. Only Carl Fox proves to be hostile to the idea since he does not trust Gekko and feels that Gekko only wants to buy up and then liquidate the airline, but, after a row with his son, he agrees to put it to his men.
Things seem to be going well, but then Fox learns at a shareholders meeting that Gekko has indeed double-crossed him and in fact intends to sell off all of Bluestar's assets leaving Carl and the entire Bluestar staff unemployed once the stock peaks at it's price. Fox himself stands to make a fortune on such a move but is racked with guilt since it was never his intention to break up Bluestar, especially since many of the staff happen to be friends whom he has known for a long time and friends of his father's. Just then, Fox learns that his father has been admitted to the hospital from a heart attack. At his father's bedside, Fox apologizes to his father for doubting him.
From this point onward, Fox resolves to destroy Gekko's plans to take over Bluestar. Darien tries to talk him out of it, pointing out the money that they are going to earn and the danger of making an enemy out of Gekko. Fox refuses to listen to her arguments and they break up, leading her to walk out on him for good.
A few days later, Fox and the union leaders privately meet Gekko's rival, Sir Laurence Wildman, who agrees to take over ownership of Bluestar, and, in return for union concessions, save it from being stripped. The next day, Fox then gets his colleagues at Jackson Steinem to persuade their clients to invest in Bluestar. Using Gekko's own methods, he leaks the news of Gekko's takeover of Bluestar which sends the share price up. The union leaders then confront Gekko, warning him that they know of his plans to liquidate the company (which of course he calmly denies) and threatening to make life so difficult for the customers that by the time the company is broken up it will be next to worthless.
Gekko decides to cut his loses and pull out of Bluestar - "What the hell. So we only make 10 million instead of 20 million." - but Fox then gets his contacts to dump their Bluestar stocks... which sends the share price down! Gekko is unable to find buyers for his own stock, "I am losing millions!", and is forced to sell at a loss. Once the share price has gone down as far as it can, Wildman buys it up, taking over Bluestar. Gekko is furious and knows who to blame.
The next day, a triumphant Fox arrives at work at Jackson Steinem & Co. where he is confronted by the police and the Securities and Exchange Commission (SEC). Apparently Gekko tipped them off about Fox's insider dealings which they themselves have been investigating for some time. Fox is arrested, handcuffed and led out of the office in tears.
Some time later, Fox confronts Gekko in rainy Central Park. Gekko berates him for his betrayal. He then viciously assaults Fox, but not before mentioning several of their illegal business transactions. Unknown to Gekko, Fox was wearing a wire which he then turns over to the federal authorities.
A few days later, Carl Fox drives his son to the New York City courthouse where he will face the consequences for his insider trading and securities fraud charges. After having a few words with his father, Fox exits the car and walks up the steps to the courthouse alone as the image pans back to the skyline view of New York. It is strongly implied that Bud Fox will go to jail for his greed, but his co-operation to implicate Gekko with him in their insider trading schemes could mean a lesser sentence and Wildman has offered him a job at Bluestar upon his release... whenever that will be.