As three US servicemen – Marine Private First Class Ira Hayes, Private First Class Rene Gagnon, and Navy Pharmacist's Mate 2nd Class John "Doc" Bradley – are feted as heroes in a war bond drive, they reflect on their experiences via flashback.
After training at Camp Tarawa in Hawaii, the 28th Marine Regiment 5th Marine Division sails to invade Iwo Jima. The Navy bombards suspected Japanese positions for three days. Sergeant Mike Strank is put in charge of Second Platoon.
The next day, February 19, 1945, the Marines land in Higgins boats and LVTs. The beaches are silent and Private First Class Ralph "Iggy" Ignatowski wonders if the defenders are all dead before Japanese heavy artillery and machine guns open fire on the advancing Marines and the Navy ships. Casualties are heavy, but the beaches are secured.
Two days later, the Marines attack Mount Suribachi under a rain of Japanese artillery and machine gun fire, as the Navy bombards the mountain. Doc saves the lives of several Marines under fire, which later earns him the Navy Cross. The mountain is eventually secured.
On February 23, the platoon under command of Sergeant Hank Hansen reaches the top of Mount Suribachi and hoists the United States flag to cheers from the beaches and the ships. Secretary of the Navy James Forrestal, who witnesses the flag raising as he lands on the beach, requests the flag for himself. Colonel Chandler Johnson decides his 2nd Battalion deserves the flag more. Rene is sent up with Second Platoon to replace the first flag with a second one for Forrestal to take. Mike, Doc, Ira, Rene, and two other Marines (Corporal Harlon Block and Private First Class Franklin Sousley) are photographed by Joe Rosenthal as they raise the second flag.
On March 1, the Second Platoon is ambushed from a Japanese machine gun nest. During the fight over the nest, Mike is hit by a U.S. Navy shell and dies from his wounds. Later that day, Hank is shot in the chest and dies, and Harlon is killed by machine gun fire.
Two nights later, while Doc is helping a wounded Marine, Iggy is abducted by Japanese troops and dragged into a tunnel. Doc finds his viciously mangled body a few days later. On March 21, Franklin is killed by machine gun fire and dies in Ira's arms. Of the eight men in the squad, only three are left: Doc, Ira, and Rene. A few days after Franklin's death, Doc is wounded by artillery fire while trying to save a fellow corpsman. He survives and is sent back home. On March 26, the battle ends and the U.S. Marines are victorious.
After the battle, the press gets hold of Rosenthal's photograph. It is a huge morale booster and becomes famous. Rene is asked to name the six men in the photo; he identifies himself, Mike, Doc, and Franklin, but misidentifies Harlon as Hank. Rene eventually names Ira as the sixth man, even after Ira threatens to kill him for doing so.
Doc, Ira, and Rene are sent home as part of the seventh bond tour. When they arrive to a hero's welcome in Washington, DC, Doc notices that Hank's mother is on the list of mothers of the dead flag raisers. Ira angrily denounces the bond drive as a farce. The men are reprimanded by Bud Gerber of the Treasury Department, who tells them that the country cannot afford the war and if the bond drive fails, the U.S. will abandon the Pacific and their sacrifices will be for nothing. The three agree not to tell anyone that Hank was not in the photograph.
As the three are sent around the country to raise money and make speeches, Ira is guilt-ridden, faces discrimination as a Native American, and descends into alcoholism. After he throws up one night in front of General Alexander Vandegrift, commandant of the Marine Corps, he is sent back to his unit and the bond drive continues without him.
After the war, the three survivors return to their homes. Ira still struggles with alcoholism and is never able to escape his unwanted fame. One day after being released from jail, he hitchhikes over 1,300 miles to Texas to see Harlon Block's family. He tells Harlon's father that his son was indeed at the base of the flag in the photograph. In 1954, the USMC War Memorial is dedicated and the three flag raisers see each other one last time. In 1955, Ira is found dead and he is suspected to have died from exposure after a night of drinking. There was no autopsy. That same year, Doc drives to the town where Iggy's mother lives to tell her how Iggy died, though it is implied that he does not tell her the truth. Rene attempts a business career, but finds that the opportunities and offers he received during the bond drive are rescinded. After failing to find work as a police officer, he spends the rest of his life as a janitor. Doc, by contrast, is successful, buying a funeral home. In 1994, on his deathbed, he tells his story to his son, James, and in a final flashback to 1945, the men swim in the ocean after raising the flags.