Following Stephen Strange's spell, the world has forgotten that Peter Parker exists. Four years later, Parker has been anonymously protecting New York City as its celebrated hero Spider-Man, but has distanced himself from those he used to know, including his ex-girlfriend Michelle "MJ" Jones-Watson and former best friend Ned Leeds. Parker stops Frank Castle from causing collateral damage in pursuit of a tank, which rampages through the city before breaking into a Department of Damage Control (DODC) building. The driver had been telepathically possessed, and the telepath body hops from person to person to help Mac Gargan escape. Parker inquires with Yelena Belova, who tells him someone has repeatedly attacked the DODC in search of "V-Max". Parker questions DODC director Bill Metzger, who claims ignorance.
Parker encounters Ned and MJ, who have moved back to New York after graduating from MIT and do not remember him. Parker returns home in distress and wakes up the next morning with heightened senses and organic webs emanating from his wrists. He tracks down Gargan, now possessed by the telepath, who tries to break back into the DODC. The telepath mocks Parker, who reacts violently, brutally beating Gargan and inadvertently injuring a responding police officer. Hoping to control his new mutations, Parker goes to Bruce Banner to ask about his inhibitor device that uses siRNA to suppress his super-powered alter ego, the Hulk. On Banner's advice, Parker makes his own inhibitor to limit his powers, while also working on a second to suppress the telepath's abilities. Before Parker can finish, the telepath finds him and threatens to attack MJ.
Parker takes MJ to Castle's hideout to protect her. With Castle's equipment and MJ's insight, Parker completes both inhibitors, and discovers that the telepath is named Jean Grey. Jean attacks the DODC again, this time in person and using a possessed Banner; his inhibitor is removed in the scuffle, causing him to revert into the Hulk. Castle arrives to assist but is possessed by Jean. Spider-Man calms the Hulk, while Jean has Frank blow open a vault where DODC agents are hiding. Spider-Man places the inhibitor on Jean, who is taken into custody, freeing Castle. Before losing consciousness, Jean mumbles "Sara". Metzger claims that while Jean was possessing him, he was remembering a deceased colleague named Sara.
When Parker returns to Castle's hideout, MJ confronts him with a letter he had kept secret explaining Strange's spell to her and Ned. Parker explains and declares his love, but MJ, not remembering Parker, doesn't reciprocate his feelings. Despite this, she invites him to her and Ned's apartment, where a masked Parker bonds with both of them. After MJ describes not remembering anything while being possessed, Parker realizes Metzger lied to him. He contacts Yelena, who learns from redacted DODC files that Sara is Jean's sister, another telepath who was kidnapped by the DODC.
Parker invades the DODC prison to rescue Jean. As Metzger begins experimenting on Jean's mind, she realizes that "V-Max" is simply the weathered "Vent Max" label on the air vent above her holding cell, the last thing Sara saw before she died. Enraged, Jean creates a psionic field miles around the facility, freezing everyone within in place except for Parker, who is still resistant to her abilities. Jean rebuffs Parker's apologies and possesses the Hand ninjas under the DODC's employ. Initially overwhelmed, Parker removes his inhibitor and embraces his new mutations to defeat the Hand. Finding Jean, Parker allows her to enter his mind; she sees a memory of his aunt May, who accepted his abilities and loved him for himself. Parker and Jean reconcile over their shared understanding of loss. Parker senses a bullet shot by Castle at Jean from a distance and shields her, sustaining a near-fatal wound.
Parker wakes up in the hospital with a remorseful Castle, who explains that Jean psychically kept him alive while in critical condition. A guilt-ridden Jean quietly leaves the city, Metzger disappears, and the DODC comes under investigation. Parker vows to no longer need to be alone to be Spider-Man. Seeing Ned again, he reintroduces himself. In a post-credits scene, Ned's "Spidey Tracker" app appears to show Spider-Man located somewhere in outer space.
