Alex Rogan is a bored teenager living in a small town in California. He spends most of his free time playing the arcade game "The Last Starfighter," dreaming of a world beyond his small town life. One night, he manages to score the highest score ever on the game, only to discover that it was a test created by an alien race called the Rylans. The Rylans are in a war with a hostile alien race called the Kodan, and they need the best Starfighters to defend their world.
Alex is taken to the Rylan planet where he meets Grig, a friendly alien who serves as his mentor. He is briefed on the war and the important role he will play as a member of the Starfighter team. Despite his initial hesitation and homesickness, Alex quickly becomes an effective team member and develops close friendships with his fellow Starfighters.
The Starfighters engage in several battles against the Kodan forces, including a climactic battle in which they must defend the Rylan home world from a massive warship. Along the way, Alex learns important lessons about leadership, loyalty, and courage, and he grows into a confident and capable young man. In the end, he returns home to a hero's welcome, but now with a new sense of purpose and adventure.