In 1985, Bud Fox (Charlie Sheen), a junior stockbroker at Jackson Steinem & Co., is 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 whose values could not conflict more with those of Bud's father Carl (Martin Sheen), a blue-collar airline maintenance foreman and union president. Bud visits Gekko on his birthday and, granted a brief interview, pitches him stocks, but Gekko is unimpressed. Realizing that Gekko may not do business with him, a desperate Bud provides him some inside information about Bluestar Airlines, which Bud learned in a casual conversation from his father. Gekko tells him he will think about it. A dejected Bud returns to his office where Gekko places an order for Bluestar stock, becoming one of Bud's clients.
Gekko gives Bud some capital to manage, but the shares Bud selects—by honest research—lose money. Instead, Gekko takes Bud under his wing but compels him to unearth new information by any means necessary, including unethical and illegal means. One of his first assignments is to spy on British corporate raider Sir Lawrence Wildman (Terence Stamp) and discern the Brit's next move. Through Bud's spying, Gekko makes big money, and Wildman is forced to buy Gekko's shares off him to complete his control of a steel company.
Bud becomes wealthy, enjoying Gekko's promised perks, including a penthouse on Manhattan's Upper East Side and a trophy blonde, interior decorator Darien (Daryl Hannah). Still employed by Jackson Steinem, Bud 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 and use friends as straw buyers to get rich.
Bud pitches a new idea to Gekko, to buy Bluestar Airlines and expand the company, with Bud as president, using savings achieved by union concessions. Bud persuades his father, Carl, who dislikes Gekko, to get union support for the plan and push for the deal. Things change when Bud learns that Gekko, in fact, plans to sell off Bluestar's assets, leaving Carl and the entire Bluestar staff unemployed. Although this would leave Bud very rich, he is angered by Gekko's deceit, and racked with the guilt of being an accessory to Bluestar's destruction. Bud chooses his father over his mentor and resolves to disrupt Gekko's plans. He angrily breaks up with Darien, who refuses to plot against Gekko, her former lover and the architect of her career.
Bud creates a plan to manipulate Bluestar's stock value downwards. Gekko, realizing that his stock is plummeting, finally dumps his remaining interest in the company, only to learn on the evening news that the shares have been picked up at a lower price by Sir Lawrence Wildman, who will become the airline's new majority shareholder. Gekko realizes that Bud engineered the entire scheme. Bud triumphantly goes back to work at Jackson Steinem & Co. the following day, where he is confronted by the police and the Securities and Exchange Commission. He is then placed under arrest for securities fraud and insider trading.
Sometime later, Bud confronts Gekko in Central Park. Gekko berates him for his role with Bluestar. He then assaults Bud, berating his ingratitude for several of their illegal business transactions. Following the confrontation, it is revealed that Bud was wearing a wire to record his encounter with Gekko. He turns the wire tapes over to the federal authorities, who suggest that his sentence will be lightened in exchange for his help. Later on, Bud's parents drive him to the courthouse, and Carl tells him he did right in saving the airline, but he'll most likely go to jail. The film ends with Bud going up the steps of the courthouse.