In 1969, a U.S. Army team is ordered to secure a village against North Vietnamese forces. Luc Deveraux (Jean-Claude Van Damme) discovers members of his squad and various villagers murdered, all with their ears removed. Deveraux finds his sergeant, Andrew Scott (Dolph Lundgren), who has gone insane, with a string of severed ears and holding a young man and woman hostage. Deveraux, who is near the end of his tour of duty, tries to reason with Scott, who executes the man and orders Deveraux to shoot the girl to prove his loyalty. Deveraux refuses and tries to save the girl, but she is killed by a grenade thrown by Scott. After gunning each other down to death. Deveraux and Scott's corpses are recovered by a second squad and cryogenically frozen, their deaths classified as "missing in action".
Deveraux and Scott's corpses are reanimated without prior memories of their previous lives and selected for the "Universal Soldier" (UniSol) program, an elite counter-terrorism unit, and are deployed via an Aero Spacelines Mini Guppy to the Hoover Dam to resolve a hostage situation. Deveraux uses efficient means to dispatch terrorists, but Scott uses excessive force, which causes concern among the project technicians. The team demonstrates their superior training and physical abilities against the terrorists, such as when GR76 (Ralf Möller) withstands close-range rifle fire. After the area is secured, Deveraux begins to regain memory from his former life upon seeing two hostages who strongly resemble the villagers he tried to save in Vietnam, causing him to disobey commands from the control team and become unresponsive.
In the mobile command center, it is revealed that the UniSols are genetically augmented soldiers with enhanced self-healing abilities and superior strength, but they also have a tendency to overheat and shut down. They are given a neural serum to keep their minds susceptible and their past memory suppressed. As a result of the glitch, Woodward (Leon Rippy), one of the technicians on the project, feels it may be better to remove Deveraux from the team until he can be further analyzed, but UniSol commander Colonel Perry (Ed O'Ross) refuses. TV journalist, Veronica Roberts (Ally Walker), who was fired while covering the Hoover Dam incident, tries to get a story on the UniSol project in order to get her job back. Roberts sneaks onto the base with a cameraman, discovering GR76 immersed in ice, still alive despite normally-fatal injuries.
When her presence is noticed, Deveraux and Scott are ordered to capture her dead or alive. She flees to her cameraman's car, but they crash. Scott coldly murders the cameraman against orders before Deveraux stops him from shooting Roberts. Together, Deveraux and Roberts escape in a UniSol vehicle. Colonel Perry insists on preventing knowledge of the UniSol program getting out, not only to the public, but to the Pentagon, having no knowledge to the true nature of the project. Deveraux and Roberts flee to a motel, where Roberts discovers she has been framed for the murder of her cameraman. Scott's previously insane personality resurfaces, causing him to kill Perry (who wants to terminate the project), the second in command, and the technicians. Scott then takes control of the mindlessly obedient UniSol team, commanding them to search and destroy Deveraux and Roberts.
Deveraux continues to regain his memories while Roberts tries to find out more information about the UniSol program. They step into a greasy spoon diner in the middle of the desert. Deveraux finds himself alone there for a while and starts ordering and devouring plate after plate of food, until the waitress asks how he's going to pay for it all. When Deveraux looks blankly at her, she calls out Hank, the cook, who threatens to harm him for being a deadbeat. However, Deveraux, though innocently saying he doesn't want to hurt him, easily beats Hank and every single patron who steps up to take him on.
Roberts and Deveraux meet Dr. Christopher Gregor (Jerry Orbach), the creator of the program, who informs them that the UniSol project was started in the 1960s in order to develop the perfect soldier. Although they were able to reanimate dead humans, they were never able to overcome the body's need for constant cooling. The other major problem is that memories of the last moments of life are greatly amplified. In Deveraux's case, he still believes he is a soldier who wants to go home, while Scott believes he is still in Vietnam fighting insurgents. When Deveraux and Roberts leave the doctor's home, they are caught and arrested by the police. En route to jail, the police convoy is ambushed by Scott and GR76. A chase ensues, ending when the police bus and the UniSol truck both drive off a cliff and explode, killing GR76. Deveraux and Roberts head to Deveraux's family's farm in Louisiana.
After Deveraux is reunites with his parents, Scott appears and takes the family and Roberts hostage. A brutal fight ensues, and Scott's use of muscle enhancers enables him to beat Deveraux mercilessly. Roberts manages to escape, only to be seemingly killed by a grenade thrown by Scott. Deveraux grabs the muscle enhancers Scott used and injects himself. Now evenly matched, Deveraux fights back and is able to impale Scott on the spikes of a hay harvester. Deveraux then starts the machine up, grinding Scott into alfalfa. Roberts is revealed to have survived the explosion, and she and Deveraux embrace.
The Special Edition DVD release features an alternative ending which starts shortly after Scott takes Deveraux's family and Roberts hostage. As Deveraux grabs a shotgun in the kitchen, the front door opens and he sees his mother at the door before Scott shoots her to death. In the final fight between Deveraux and Scott, Deveraux does not use Scott's muscle enhancers. Shortly after grinding Scott to death, Deveraux is shot by his "father" before Dr. Christopher Gregor and his men appear.
Gregor explains that he used Deveraux to entrap both him and Scott, and that Deveraux was staying with people posing as his parents. He then has his men shoot Deveraux, but, before Deveraux dies, the police and Roberts' news crew arrive. The news crew douse Deveraux with a fire extinguisher to stabilize him while Dr. Gregor and his men are arrested. Roberts is given the microphone to cover the arrest, but she loses all composure while on the air, dropping the microphone to comfort Deveraux.
Several days later, Deveraux is reunited with his real parents. The film ends with a eulogy narrated by Roberts, who explains that Deveraux rejected all life-prolonging medication before dying a natural death.
Principal photography began in August 1991. Carolco, the company that produced the film, was having financial troubles and hoped that the film's box office return would keep them afloat.
At the 1992 Cannes Film Festival, Van Damme and Lundgren were involved in a verbal altercation that almost turned physical when both men pushed each other only to be separated. On his website, Dolph Lundgren confirmed that it was just a publicity stunt to promote the film. It was the last film that used the multi-channel surround sound format, Cinema Digital Sound.
Universal Soldier opened in theaters on July 10, 1992 where it grossed $10,057,084 from 1916 theaters with a $5,249 per screen average. It opened and peaked at No. 2, behind A League of Their Own's second weekend. Grossing $36,299,898 in US ticket sales, it underperformed given its $23 million budget.
Mainstream critics dismissed it as a Terminator 2 clone, or as a typical, mindless action film. Based on reviews from 26 critics the film holds an approval rating of 19% on Rotten Tomatoes.