In Congress, Senator Robert Kelly attempts to pass a "Mutant Registration Act", which would force mutants to publicly reveal their identities and abilities. Magneto begins his plans to level the playing field between mutants and humans. Meanwhile, a girl named Marie (a.k.a Rogue) runs away from her home in Meridian, Mississippi. She meets Wolverine in Canada. Suddenly, both of them are attacked by Sabretooth, a mutant and associate of Magneto. Cyclops and Storm arrive and save Wolverine and Rogue and bring them to the X-Mansion. Professor Charles Xavier runs the facility, and leads a group of mutants who are trying to seek peace with the human race, educate young mutants in the responsible use of their powers, and stop Magneto from starting a war with humanity.
Abducted by Mystique and Toad, Senator Kelly is brought to Magneto, who tests a machine on him that artificially induces mutation though Kelly manages to escape imprisonment with his new abilities. After an accident causes Rogue to use her powers on Wolverine, she is convinced by Mystique (disguised as Bobby Drake) that Xavier is angry with her and that she should leave the school. Xavier uses Cerebro to locate Rogue at a train station. Mystique infiltrates Cerebro and sabotages the machine. At the train station, Wolverine convinces Rogue to stay with Xavier but a fight ensues when Magneto, Toad and Sabretooth arrive to take Rogue. Arriving at Xavier's school Kelly dissolves into a puddle of water when his mutation becomes unstable.
The X-Men learn that Magneto intends to use Rogue's ability on himself to power his machine. Xavier attempts to use Cerebro to locate Rogue but falls into a coma. Jean Grey fixes it and uses Cerebro to find Magneto's machine on Liberty Island, which Magneto intends to use on the world leaders who are meeting for a summit on nearby Ellis Island. Just as the group arrives at the top of the statue and kill Toad, Magneto and Sabretooth incapacitate the group and continue with their plans. Magneto transfers his powers to Rogue who is forced to use them to start the machine. Wolverine breaks free and initiates a fight with Sabretooth but is thrown over the side of the statue.
Wolverine returns, and Cyclops, with Jean's help, blasts Sabretooth out of the statue. With Jean stabilizing him, Storm uses her abilities to send Wolverine to the top of Magneto's machine. With time running out, Wolverine attempts to stop the machine and save Rogue, but Magneto, now having regained some of his strength, halts Wolverine's claws. Cyclops manages to find a clean shot, wounding Magneto and allowing Wolverine to destroy the machine. Placing his hand to her face, Wolverine succeeds in transferring his regenerative abilities to a dying Rogue. Professor Xavier recovers from his coma and the group learns that Mystique is still alive (after Wolverine stabbed her at Liberty Island) when they see her impersonating Senator Kelly on a news broadcast. In an attempt to help Wolverine learn more about his past, Xavier sends him to a military base near Alkali Lake. Xavier visits Magneto in his plastic prison cell, and the two play chess. Magneto warns his friend that he will continue his fight, to which Xavier promises that he (and the X-Men) will always be there to stop him.