Buzz Lightyear and his partner Warp Darkmatter search for three missing Little Green Men (L.G.M.), a noosphere-dwelling race working as scientists for Star Command's Universe Protection Unit. They discover the lost L.G.M. in a hidden lab belonging to Buzz's archnemesis, the evil Emperor Zurg. Buzz and Warp break in and rescue the L.G.M. However, Zurg escapes and triggers the self-destruct mechanism; Warp gets pinned under debris and forces Buzz to leave just before the explosion happens, seemingly killing Warp. Stricken with survivor guilt over Warp's death, Buzz refuses to have another partner.
Later, Commander Nebula introduces Mira Nova, a prodigy ranger and the princess of the planet Tangea, which Buzz saved from Zurg a while back. With the power of "ghosting", Mira is able to phase through objects. Nebula makes Mira Buzz's new partner, but Buzz refuses. Afterwards, Buzz prevents a well-meaning janitor named Booster—who dreams of becoming a space ranger—from being fired. Meanwhile, in Zurg's fortress, a new robotic henchman named Agent Z is hired. Zurg learns of a large orb on the L.G.M. home world called the Uni-Mind, responsible for the telepathic link between them; he sends Agent Z to capture it. The L.G.M. on Star Command build a new robot soldier called XR, capable of being repaired after any damage. The L.G.M. offer XR as Buzz's new partner, but Buzz is hesitant. The L.G.M. then get a telepathic message about Zurg's attack on their homeworld. When Buzz and XR arrive on the L.G.M. planet, Agent Z confronts them and destroys XR while Zurg steals the Uni-Mind. Unable to think clearly, the L.G.M. rebuild XR, accidentally making him self-aware. Commander Nebula decides to launch a full-scale assault on Planet Z, despite Mira's argument that a solo ranger could go to stop Zurg with the Alpha-One prototype spacecraft.
Zurg corrupts the Uni-Mind and installs it into the "Mega-Ray" to bend the galaxy to Zurg's will. Mira steals the Alpha-One to fight Zurg. Buzz, who wanted to use her plan by himself, pursues Mira in his own craft, unaware Booster and XR have stowed away on his ship. Eventually, Buzz catches Mira and stores Alpha-One in his spaceship's cargo bay; Booster and XR are then discovered. Zurg's Mega-Ray subverts several planets in quick succession before turning it on Star Command. Buzz, Mira, Booster, and XR discover all of Star Command has been suborned by Zurg; they flee in Buzz's Star Cruiser. Zurg uses Star Command's entire arsenal, planting a bomb on Buzz's ship. Buzz and the others escape in the Alpha-One just before the bomb detonates, destroying the cruiser. Zurg presumes Buzz is dead.
Booster accidentally causes the ship to crash-land on Planet Z. There, Buzz, insistent on finishing the mission alone, orders the others to leave. Buzz fights Agent Z, but is incapacitated and delivered to Zurg. Agent Z reveals himself to be Warp; in addition to having faked his death, he had secretly been working for Zurg for years as a double agent. Buzz dictates his "final log entry", a coded distress call to Mira, Booster and XR.
Zurg plans to use the Mega-Ray on Buzz, but XR and Booster intervene in time to rescue him as it fires. Booster and Mira destroy Warp's mechanical arm after Booster lands on him. Buzz fights Zurg, who escapes before Buzz's allies can arrest him. Booster and XR arrest Warp. Mira uses her "ghosting" power to push Buzz to the core of the Uni-Mind and restore it to normal, freeing the suborned peoples and leaving Zurg momentarily helpless and dismayed. The unity of the L.G.M. is restored and Warp is taken to prison for treason. Buzz, having admitted that he cannot work alone, creates a new team called "Team Lightyear" with XR, Mira and Booster.
