Dr. Harry Dalton, a volcanologist with the United States Geological Survey, and his associate/partner Marianne attempt to escape an erupting volcano in Colombia. While trying to escape the ash and falling debris, Marianne is killed when a lump of cooled lava comes through the roof of Harry's truck and strikes her in the head.
Four years later, Harry is sent by his boss Dr. Paul Dreyfus to check out volcanic activity in the small town of Dante's Peak, Washington, situated beside a dormant volcano within the Northern Cascades. Harry arrives in town and meets Mayor Rachel Wando who has two children, Graham and Lauren. Before Rachel can show him the lake, they go to drop off the children with Rachel's ex-mother-in-law Ruth who lives on the mountain. Ruth suggests that they all go swim in the hot springs. Harry notices that the lake's acidity is somewhat high, trees are dying they discover dead squirrels. Graham is about to jump into the springs when Harry stops him just as Lauren screams, noticing two bodies having been boiled by the water. Harry sees this as a bad sign, tells Rachel to call a town meeting and informs Paul of the situation.
While Harry is advising putting the town on alert, Paul shows up and stops him by telling him that he is overacting and that for now they will just observe. While Paul and his team are setting up and monitoring the volcano, Harry and Rachel become close. Harry and Terry go up on the mountain with a robot to monitor it. A tremor causes some of the rocks to collapse, breaking Terry's leg. While Terry is being airlifted to the hospital, Harry tries again to tell Paul this mountain is going to explode, to no avail. After a week and no other major activity, Paul decides they can monitor the volcano back home and tells everyone to pack up.
Harry goes to say goodbye to Rachel, they almost kiss but Lauren wakes up stating that she needs a glass of water. Rachel points out that there is something wrong with the tap water and Harry discovers by visiting the main water supply the volcanic activity has leached sulfur into the water. Harry shows this to Paul and they all then realize it's only a matter of time before the volcano explodes.
While informing the town of the evacuation plans the following day a series of massive earthquakes creates pandemonium in the gym and as people rush out, the top of the volcano explodes! People are now panicking trying to get out of the town. While trying to get to Rachel's children, they drive through panicked evacuees, a river, and the ash cloud.
Arriving at Rachel's house, they find the children missing. Graham and Lauren stole Rachel's truck and drove up the mountain to Ruth, who refused to leave the mountain. After reaching Ruth's house and finding the children, a river of lava destroys Ruth's house forcing them to the lake. The lake, which has been turned to acid, starts eating away at the boat and propeller. They are almost at the other side when the propeller gets eaten away. Harry wraps his arm in his jacket to paddle but they are sinking too fast. Trying to save everyone, Ruth jumps in the shallow part of the lake and pulls the boat to the dock, seriously burning her legs. After being carried by Harry down the mountain, Ruth can't go any further and dies due to the shock and trauma after finally making peace with Rachel.
Paul and the team evacuate the town with the help of the National Guard but the swelling river has overflowed from a combination of the volcano's melting ice and the local dam breaking. With everybody out of town, the scientists depart with the Guard. The team gets through safely in Humvees but Paul, driving their van, gets stuck on the bridge which is washed away by the river. After finding a truck at a ranger station, Harry, Rachel, and the children make it back into town as the volcano violently explodes. As the pyroclastic cloud destroys the town, Harry drives the truck into an abandoned mine (which had been Graham's hideout) just in time to escape the pyroclastic cloud.
Harry has a beacon in the truck that will help his team locate and rescue them all. He tells Rachel and the kids he will be back; he reassures everyone that when they get out he will take them deep sea fishing. As he returns the truck to activate the beacon, the mine collapses, separating him from Rachel and the children. Despite a broken arm, Harry activates the beacon while the truck is crushed by the weight of the debris.
Eventually, they are all rescued and reunited with Harry, reiterating his promise to take them deep sea fishing. As the helicopter carrying Harry and the Wando family flies off, the camera moves over the destroyed town and swerves eerily to the now Mount St. Helens-like crater where the top of the volcano used to be.