Five individuals arrive at Fantasy Island, a tropical resort where dreams are said to become reality. Among them are Gwen Olsen, portrayed by Maggie Q, Patrick Sullivan, played by Austin Stowell, stepbrothers J. D. and Brax Weaver, portrayed by Ryan Hansen and Jimmy O. Yang respectively, as well as teenager Melanie Cole, played by Lucy Hale. Upon their arrival, the enigmatic island proprietor, Mr. Roarke, depicted by Michael Peña, welcomes them and explains the concept of their upcoming fantasies.
Each character's fantasy is tailored to their desires: Patrick is thrust into a war scenario to honor his late father; Melanie seeks vengeance on her childhood nemesis, Sloane Maddison, played by Portia Doubleday; the Weavers are celebrated guests at a lavish mansion party; while Gwen finds herself considering a marriage proposal from her former love, Allen Chambers, enacted by Robbie Jones, whom she spurned in the past.
As events unfold, Melanie discovers that Sloane has been abducted and brought to the island against her will. In a harrowing turn, Melanie rescues Sloane from a sinister masked figure known as the surgeon. Simultaneously, Patrick is captured by a militant group and taken to see their commander, Lieutenant Sullivan, portrayed by Mike Vogel, whom he recognizes as his own father. As night descends, the surgeon returns to threaten the girls, but Damon, played by Michael Rooker, a private investigator, intervenes, revealing his own tragic backstory tied to the island and its twisted nature, explaining that Roarke’s visions are fueled by spring water found beneath a glowing stone in a cave.
In a desperate bid, the trio retrieves some of the water and seeks assistance at the resort. The following morning, Gwen awakens to a chilling reality: she has a daughter with Allen, a life that she now finds unfulfilling. Roarke discloses the crucial truth that the fantasies must reach their conclusions for him to maintain his personal quest to reunite with his deceased wife.
Gwen persuades him to grant her one true wish: to save her neighbor Nick Taylor, portrayed by Nick Slater, who tragically perished in a fire. Unknown to the guests, their fantasies begin to unravel into nightmarish scenarios as the Weavers fall prey to a drug cartel linked to the mansion owner. In a climactic twist, Gwen finds herself thrown into the fateful night of the fire, grappling with her past actions, discovering that all guests, excluding Melanie, were present that night. Despite her attempts to save Nick, she fails and needs rescuing from Roarke's assistant, Julia, enacted by Parisa Fitz-Henley.
Meanwhile, Sullivan's brigade assembles to rescue the Weavers but faces lethal consequences when they confront the cartel's forces, resulting in J.D. being grievously wounded and Sullivan sacrifice himself for Patrick and Brax's escape. The confrontation continues as Melanie and Sloane are attacked by the zombified surgeon, leading to Damon’s selfless act of sacrifice.
As the remaining guests retreat to the resort only to be cornered by Roarke, they learn that their impending deaths are part of their shared fantasy, anchored in shared guilt regarding Nick's fate. In a shocking revelation, Melanie's motives are unveiled—her desire for revenge fuels the events of the island. The realization dawns that Julia was Roarke's wife, who died tragically but came back through the island's magic, urging him to intervene on behalf of the guests.
In a final act of desperation, Sloane recalls the spring water and wishes for Melanie to be eternally united with Nick. This leads to a chaotic confrontation as Nick's undead form emerges to drag Melanie into the depths. Before she succumbs, she activates a grenade, prompting Patrick to heroically sacrifice himself to save the others. As the chaotic fantasy draws to a close, Gwen, Sloane, and Brax awaken at the resort, where Roarke allows them to leave the now-purified Fantasy Island.
Brax, longing for a reunion with J.D., learns he must remain on the island to fulfill this wish. After the trio boards a plane to depart, a resurrected J.D. follows them, while Roarke requests Brax to take on a new role as his assistant. Embracing his past, Brax chooses to take on the name "Tattoo," honoring the memories of their shared experiences.
