In 2285, Admiral James T. Kirk oversees a simulator session of Captain Spock's trainees. In the simulation, Lieutenant Saavik commands the starship USS Enterprise on a rescue mission to save the crew of the damaged ship Kobayashi Maru, but is attacked by Klingon cruisers and critically damaged. The simulation is a no-win scenario designed to test the character of Starfleet officers. Later, Dr. Leonard McCoy visits Kirk on his birthday; seeing Kirk in low spirits due to his age, the doctor advises Kirk to get a new command instead of growing old behind a desk.

Meanwhile, the starship Reliant is on a mission to search for a lifeless planet to test the Genesis Device, a technology designed to reorganize dead matter into habitable worlds. Reliant's Captain Clark Terrell and first officer Commander Pavel Chekov beam down to evaluate a planet they mistakenly believe to be Ceti Alpha VI. Once there, they are captured by the genetically-engineered tyrant Khan Noonien Singh, who explains that they are on Ceti Alpha V. Fifteen years prior, Kirk exiled Khan and his followers there after they attempted to take over Enterprise; six months later, Ceti Alpha VI exploded, shifting the orbit of Ceti Alpha V and turning it into a desert wasteland. The catastrophe killed many of Khan's followers, while others, including his wife, were killed by native parasitic Ceti eels.

Khan implants Chekov and Terrell with eel larvae, rendering them susceptible to mind control and uses the pair to capture Reliant. While Khan's lieutenant, Joachim, suggests abandoning his quest for revenge, Khan insists on killing Kirk. Learning of the Genesis Device, Khan attacks space station Regula I, where the device is being developed by Kirk's former lover, Dr. Carol Marcus, and their son, David.

Kirk assumes command of Enterprise after the ship, deployed on a training cruise, receives a distress call from Regula I. En route, Enterprise is ambushed and crippled by Reliant. Khan offers to spare Kirk's crew if they relinquish all material related to Genesis; Kirk instead stalls for time and, taking advantage of Khan's unfamiliarity with starships, remotely lowers Reliant's shields, enabling a counter-attack. Khan is forced to retreat and effect repairs, while Enterprise limps to Regula I. Kirk, McCoy, and Saavik beam to the station and find Terrell and Chekov alive and Carol Marcus's team slaughtered. They find Carol and David hiding Genesis deep inside the nearby planetoid. Khan, having used Terrell and Chekov as spies, orders them to kill Kirk; Terrell resists the eel's influence and kills himself, while Chekov collapses as the eel leaves his body. Khan transports Genesis aboard Reliant, intending to maroon Kirk on the planetoid, but is tricked by Kirk and Spock's coded arrangements for a rendezvous. Kirk directs Enterprise into the nearby Mutara Nebula, successfully taunting Khan into following him; conditions inside the nebula render shields useless and compromise targeting systems, making Enterprise and Reliant evenly matched. Spock notes that Khan's tactics indicate inexperience in three-dimensional combat, which Kirk exploits to disable Reliant.

Mortally wounded, Khan activates Genesis, quoting Captain Ahab as he dies. Kirk's crew detects the activation and attempts to move out of range, but with the ship's warp drive damaged, they will not be able to escape the nebula in time. To restore warp power, Spock goes to the engine room, which is flooded with radiation. When McCoy tries to prevent Spock's entry, Spock incapacitates him with a Vulcan nerve pinch and performs a mind meld, telling him to "remember". Spock repairs the warp drive, and Enterprise jumps to warp, escaping the explosion, which forms a new planet. Before dying of radiation poisoning, Spock urges Kirk not to grieve, as his decision to sacrifice himself to save Enterprise was a logical one. Kirk and the ship's crew host a space burial for Spock, whose casket lands on the new Genesis planet.