Gunnery Sergeant Thomas Highway (Eastwood) is nearing mandatory retirement from the Marine Corps. He finagles a transfer back to his old unit. On the bus trip to his new assignment, he meets fellow passenger "Stitch" Jones (Van Peebles), a flashy wannabe rock musician who borrows money for a meal at a rest stop and then steals his bus ticket, leaving him stranded.
When Highway finally arrives at the base, more bad news awaits. His new Operations Officer, Major Malcolm Powers (Everett McGill), is an Annapolis graduate who transferred over from Supply and has not had "the privilege" of combat. He sees Highway as an anachronism in the "new" Marine Corps, and assigns him to shape up the reconnaissance platoon. "Recon" is made up of undisciplined Marines who had been allowed to slack off by their previous platoon sergeant. Among his new charges, Highway finds none other than a dismayed Corporal Stitch Jones. Highway quickly takes charge and starts the men on a rigorous training program. They make a last-ditch attempt to intimidate Highway with "Swede" Johanson (Peter Koch), a gigantic, heavily-muscled Marine just released from the brig, but their plan fails miserably after Highway defeats him easily, and they eventually begin to shape up and develop esprit de corps.
Highway repeatedly clashes with Powers and Staff Sergeant Webster (Moses Gunn) over his unorthodox training methods (such as firing live ammunition from an AK-47 over his men's heads to familiarize them with the weapon's distinctive sound); Powers makes it clear that he views Highway's platoon as only a training tool for his own elite outfit. Major Powers goes so far as to script and make the Recon platoon lose in every field exercise. However, Highway is supported by his old comrade-in-arms, Sergeant Major Choozhoo (Arlen Dean Snyder), and his nominal superior officer, the college educated but awkward and inexperienced Lieutenant Ring (Boyd Gaines). After Highway's men learn that he had been awarded the Medal of Honor in the Korean War, they gain respect for him and close ranks against their perceived common enemy.
Highway also has more personal problems. Aggie (Marsha Mason), his ex-wife, is working as a waitress in a local bar and dating the owner, Marine-hater Roy Jennings (Bo Svenson). Highway attempts to adapt his way of thinking enough to win Aggie back, even resorting to reading Cosmopolitan magazine to gain insights into the female mind. Initially, Aggie is bitter over their failed marriage, but tentatively reconciles with Highway. Then Highway's unit is activated for the invasion of Grenada.
After a last-minute briefing in the hangar bay of the amphibious assault ship USS Iwo Jima LPH 2, Highway's platoon mounts their UH-1 Huey, and are dropped by helocast into the water in advance of the rest of the Battalion Landing Team. While advancing inland, they come under heavy fire. Highway improvises, ordering Stitch Jones to use a bulldozer to provide cover so they can advance on and destroy an enemy machine gun nest. They subsequently rescue American students from a medical school. Later, when they are trapped in a building by enemy armor and infantry, radioman Profile (Tom Villard) is (thought to have been) killed (really only wounded)and his radio destroyed, cutting them off from direct communication. Lieutenant Ring shows previously unsuspected leadership qualities and comes up with the idea of using a telephone to make a long distance call to Camp Lejeune in North Carolina and call in air support. Later, despite Powers' explicit orders to the contrary, the men take out a key position and capture enemy soldiers. When Powers finds out, he bawls them out and threatens Highway with a court-martial, but their commanding officer, Colonel Meyers, arrives and reprimands Powers for discouraging initiative and fighting spirit.
When Highway and his men return to the U.S., they are met by a warm reception. Aggie is there to welcome him back. To Highway's mock dismay, Stitch informs him that he is going to stay and make a career for himself in the Marines, while Highway takes his mandatory retirement.
What does Powers threaten Highway with?
court-martial