Chris Taylor (Charlie Sheen) is a young American who has abandoned a privileged life at a university to enlist in the infantry, volunteering for combat duty in Vietnam. The year is September 1967. Upon arrival in Da Nang, South Vietnam, he sees dead soldiers in body bags being loaded into his plane, but more distressing to him is the shellshocked state of a departing soldier with the "thousand-yard stare." Taylor and several other replacements have been assigned to Bravo Company, 25th Infantry division, "somewhere near the Cambodian border." Worn down by the exhausting work and living conditions, his enthusiasm for the war wanes quickly and he develops an admiration for the more experienced soldiers, despite their reluctance to extend their friendship.

One day, another new arrival, platoon commander Lieutenant Wolfe (Mark Moses) discusses the plans for a patrol later that night with the platoon sergeants: the compassionate Sergeant Elias Grodin (Willem Dafoe), harsh but suicidal Staff Sergeant Barnes (Tom Berenger), cowardly lifer Sergeant Red O'Neil (John C. McGinley), and heroin addict Sergeant Warren (Tony Todd). Barnes and Elias argue over whether to send the new men out on a patrol that is likely to be ambushed. O'Neil insists that the new troops go out instead of several men under him who are nearly finished with their tours of duty. Barnes agrees, only on the condition that O'Neil goes out as well.

That night, North Vietnamese soldiers set upon Taylor's sleeping unit. Gardner (Bob Orwig), a fellow new recruit, is killed, and another soldier, Tex (David Neidorf), has his hand blown off. Despite having passed the watch duty to Junior (Reggie Johnson), a more experienced but consistently irresponsible soldier who fell asleep, Taylor is blamed for the casualties (O'Neil is also to blame, having thrown the grenade that maimed Tex). Immediately after the fighting Taylor discovers a light wound to his neck, and he is sent to the field hospital for treatment.

A few days later, Taylor returns to his unit from the hospital and, through a soldier named King (Keith David), gains acceptance from the "heads", a tight-knit group led by Elias that socializes, dances, and takes drugs in a private bunker. Next door, Barnes leads the more traditional members of the unit whom drink beer and play cards. Taylor becomes a more seasoned soldier as the patrols continue and soon no longer stands out amongst the others. He then becomes friends with Gator Lerner (Johnny Depp), Francis (Corey Glover), Big Harold (Forest Whitaker), Rhah (Francesco Quinn), Crawford (Chris Pedersen) and Doc Gomez (Paul Sanchez).

During one patrol on New Years Day, January 1, 1968, two members of the platoon, Sandy (J. Adam Glover) and Sal (Richard Edson) find an abandoned bunker and are killed when they stumble upon a booby trap attached to a box of documents. Shortly after, a soldier named Manny Washington (Corkey Ford) goes missing. His mutilated body is found tied to a post close by. The platoon is infuriated by the senseless death of their comrade and are ordered to report to a nearby village of South Vietnamese citizens.

The platoon reaches the village, where a food and weapons cache is discovered. The other soldiers explore the village. In one house, Taylor discovers a mute and mentally & physically disabled boy and his mother hiding in a hole beneath the floor. Taylor harasses and taunts the retarded boy by shooting his rilfe at his one foot (causing him to hop), but goes no further. However, Bunny (Kevin Dillon) then takes over and beats the boy to death with his gun, even though Sgt. O'Neil orders them to leave the hut. While questioning the village chief, Barnes loses his patience and senselessly kills the man's wife despite his denials that they are aiding the Viet Cong. Barnes is about to murder the man's young daughter to force him to tell them where the enemy is, when Sergeant Elias arrives at the scene and starts a fistfight with Barnes. Lieutenant Wolfe, passive during the shooting of the wife, eventually ends the fight, and relays orders from his own superior officer to burn the village. As the men leave, a group of four soldiers, Bunny, Junior,Tony Hoyt (Ivan Kane) and Morehouse (Kevin Eshelman), drag two young Vietnamese girls into the bushes with the intention of raping them. Taylor comes upon them and stops the group from raping the girls. His comrades ridicule him for stopping them.

Upon returning to base, Elias reports Barnes' actions to Captain Harris (Dale Dye), who cannot afford to remove Barnes due to a lack of personnel. However, Harris threatens to court martial anyone if there is evidence that there has been a murder of an unarmed civilian. O'Neil and Bunny, nervous about the possibility of an investigation, speak to Barnes and Bunny suggests "fragging" Elias. A narrating Taylor speaks of this as "a civil war in the platoon. Half with Elias, half with Barnes." Taylor talks with Elias one night and Elias tells him that the United States is due for a loss in war because they'd been mostly successful in past wars. He also confesses that he's disillusioned with America's mission in Southeast Asia, that he used to believe it was winnable, but knows now that it's not.

On their next patrol the platoon is ambushed and pinned down in a firefight by unseen enemy soldiers. Flash (Basile Achara) is killed and Sergeant Warren and Lerner are badly injured in the resulting skirmish. Lieutenant Wolfe calls in wrong coordinates for artillery support, resulting in the deaths of Fu Sheng (Steve Barredo), Morehouse, and Tubbs (Andrew B. Clark) and the severe wounding of Ace (Terry McIlvain). Big Harold has his leg blown off by a trip-wired booby trap while trying to escape the artillery barrage. Elias, with Taylor, Rhah, and Crawford, go to intercept flanking enemy troops. Rhah kills one of them and Taylor kills two, but Crawford is injured when he is shot in his lung.Though Lt. Wolfe is commanding officer, his inaccurate coordinates for artillery bombardments cause the death and injury of several of his own troops and Barnes takes command. He orders the rest of the platoon to retreat to be airlifted from the area, and goes back into the jungle to find Elias' group. After sending Taylor, Rhah, and Crawford back, Barnes finds Elias. Barnes fires three rounds into Elias' chest and leaves him for dead. Barnes runs into Taylor and tells him that Elias is dead and that he'd seen his body nearby. Barnes orders Taylor back to the landing zone. Meanwhile the wounded get put on helicopters, including Lerner, Ace, Warren, Crawford and Big Harold. Then the dead (Flash, Morehouse, Fu Sheng and Tubbs) are also put on the helicopters. After they take off the men see a severely wounded Elias emerge from the jungle, running from a large group of NVA soldiers. He dies after being shot several more times by the NVA while the American helicopters attempt to provide cover fire overhead.

At the base, Taylor tries to talk his dwindling group of heads, six including himself (King, Rhah, Francis, Doc & Huffmeister) into killing Barnes in retaliation. While King agrees, Doc believes they should wait for "military justice" to decide Barnes' fate. Rhah reminds Taylor how much he admired Barnes when he first arrived, and that Barnes isn't meant to die, noting that on several previous occasions Barnes has sustained wounds that ought to have proved mortal: "The only thing that can kill Barnes, is Barnes." Barnes then appears, very drunk with a bottle of bourbon, having overheard Taylor calling for his murder. He enters the room, daring them to kill him. No one takes up the offer but as Barnes leaves, Taylor attacks him. Barnes quickly gets the upper hand, pins Taylor down and holds a knife to his face. Rhah urges him not to do it, telling Barnes he'll be court-martialed and imprisoned, and he leaves, slashing Taylor under the eye.

The next day, the platoon is sent back to the ambush area in order to build and maintain heavy defensive positions against a potential attack. Rhah is promoted to Sergeant, commanding the remains of Elias' squad. The platoon is so severely weakened, though, that there are numerous gaps in their defense (in fact only 15 of the original 30 strong platoon remain). When this is pointed out to him, Lt. Wolfe only replies that he doesn't "give a fuck" any more. The troops try to prepare for the incoming battle, during which they know the majority of them will die. Just hours before nightfall, King is allowed to go home as his tour of duty has come to an end. O'Neil tries to use Elias' R&R days for himself in order to escape the impending battle (in which he believes he will die). When he asks Barnes for permission, Barnes refuses, saying, "Everybody gotta die some time, Red." Junior tries to escape the battle by spraying mosquito repellent onto his feet and passing it off as trench foot, a ploy that Barnes recognizes right away. Bunny states that he feels no remorse for the murders he has committed, saying that he enjoys Vietnam, and goes on to proclaim himself to be "Audie Murphy", a famous and highly decorated World War II hero.

Francis, one of the last few remaining "heads", is assigned to the same foxhole as Taylor. That night a large attack occurs and the American defensive perimeter is broken and the camp overrun by hundreds of attacking North Vietnamese troops. Taylor and Francis take on and cut down several attacking enemy troops until they both pause when they hear signal whistles from the unseen NVA sergeants ordering their men to cease fire. Hearing a Vietnamese voice over a bullhorn and understanding that the NVA are ordering RPG's up to the line to blow up the foxhole they are in, Taylor grabs Francis and both of them crawl out of the foxhole seconds before it's hit by an RPG. Taylor and Francis then attack and kill several enemy soldiers that overrun their destroyed foxhole until Taylor loses it during the fight and charges off into the carnage, shooting one enemy soldier after another. Bunny kills two NVA soldiers and Junior runs away, distracting Bunny, who then gets shot in the stomach and head by an NVA soldier. Junior hits a tree and is knocked out, he is then stabbed in his stomach with a bayonet by another NVA soldier.

Meanwhile, the NVA attack against the base continues relentlessly. The command bunker is destroyed by a NVA suicide bomber (Oliver Stone makes a cameo as the doomed battalion commander inside the bunker). Wolfe wants to retreat, but Harris orders him to stay and fight. While Parker (Peter Hicks) dies of his wounds, Wolfe, Doc and Tony Hoyt charge at the NVA. Tony is wounded, Doc and Wolfe get killed. O'Neil survives only by hiding himself under a dead body. The desperate company commander, Captain Harris, orders the Air Force pilots to "expend all remaining" inside his perimeter. During the chaos, Barnes and Taylor come face-to-face. As Barnes is about to kill Taylor with a shovel, the two are knocked unconscious by the last-ditch American napalm attack.

A wounded Taylor regains consciousness the next morning with a serious wound to his lower abdomen. He soon finds Barnes, who is also wounded after being shot in both legs during the battle. Taylor takes an AK-47 rifle from a dead enemy soldier and aims it at Barnes, who lays helpless on the ground. Nonetheless, Barnes at first doesn't feel threatened, and he dismissively orders Taylor to call a medic. When Taylor does not comply, but instead continues to aim his weapon, Barnes (tired of the fighting) begs him to pull the trigger by saying: "Do it!" Taylor shoots Barnes three times in the chest, killing him. Taylor then drops his rifle, collapses, and awaits medical attention.

Interestingly, although not in the script, Taylor is seen on the verge of pulling the pin of a grenade that he found, only to drop it as reinforcements come to Taylor. (Charlie Sheen thought that Taylor would be suicidal after killing Barnes. Oliver Stone thought that the adlib was so good he decided to keep it in the film.)

Francis emerges from his foxhole and stabs himself with a bayonet in order to be evacuated as a casualty (having also been previously wounded. Military laws state that your tour can end if you have received two Purple Hearts). O'Neil is found by other Americans, and Harris (much to O'Neil's distress) gives him command of the platoon. As he is evacuated onto a helicopter, Taylor is reminded by Francis that because they have been wounded twice, they can go home (Francis is evacuated on another helicopter along with Rodriguez (Chris Castillejo). After bidding farewell to Rhah,Tony and Huffmeister (Robert Galotti), his last surviving friends in the platoon; the other survivors are Ebenhoch (Mark Ebenhoch) and O'Neil. Taylor boards his helicopter. The helicopter flies away and Taylor weeps as he stares down at the destruction, while he (from a future perspective) narrates that he will forever be in Vietnam, with Barnes and Elias battling for what Rhah called "possession of his soul", and that he believes he and other veterans must rebuild themselves, and find goodness and purpose in their lives.