Idealistic Johnny Utah (Keanu Reeves) enters the FBI under the wing of washed up Angelo Papas (Gary Busey). Despite Papas' experience he gets no respect, his colleagues mock his theory that a gang of serial bank robbers terrorising California are actually mystery surfers. Johnny nevertheless listens to Papas and agrees to go undercover as a grommet. One day after exiting the water Johnny is violently attacked by a group of beach punks. At this point he is saved by the charismatic Bodhi (Patrick Swayze). Ten years older he commands respect from everyone, he beguiles Johnny with his spiritual wisdom. Johnny does not suspect that Bodhi is, in fact, the leader of the Ex-Presidents heist gang. At the same time Bodhi has no idea that Johnny is an FBI agent, rather he sees him as a potential protégé. Their plutonic love is blind.
In part because both men are heterosexual Johnny starts having sex with Bodhi's on and off again girlfriend, Tyler (Lori Petty). An orphan she was probably drawn to Bodhi as something of a father figure. Bodhi is cool with Johnny and Tyler's developing relationship but their romance is fraught, while they care about each other Johnny's deepest feelings are for Bodhi. Only after the two men have developed serious emotions towards each other do they discover the other's true identity.
Following a botched heist interception Johnny chases a Ronald Reagan masked Bodhi on foot through the back allies of Los Angeles. When they jump into the city viaduct Johnny is injured, unable to keep chase. As Bodhi climbs a fence to escape Johnny draws a gun. Looking into each others eyes from a distance Johnny cannot shoot his friend, instead he fires the weapon into the air, screaming in frustrated agony.
The next day, and despite all that has happened, Bodhi tries to recruit Johnny into the Ex-Presidents. He does this by aggressively bullying Johnny into skydiving with the group. The plane jump is the ecstatic highpoint of the film. Falling through the air they hold hands in a bro grip, ignoring the unavoidable reality that awaits them on the ground. As the high of the jump wears off Bodhi attempts to initiate Johnny all the way into the Ex-Presidents by forcing him to rob bank with them. When Johnny does not comply people get killed. This is the breaking point of their relationship.
Papas shows up in the aftermath and together with Johnny they chase the Ex-Presidents to an airfield. Before their light airplane takes off Papas pulls his weapon on Bodhi. He is about to fire but Johnny stands in the way of the potential bullets. Inadvertently this gives one of the other bank robbers an opportunity to shoot Papas dead. Not only could Johnny not hurt Bodhi himself he could also not allow anyone else to. Johnny is rendered unable to perform his moral obligations as a law enforcer because of his emotions.
Months later and Bodhi has escaped to Australia where Johnny finally catches up to him. Down on the beach watching the ocean produce lethal waves Johnny attempts to bring Bodhi into custody peacefully but Bodhi rejects him. During a brawl in the surf, Johnny manages to handcuff himself to Bodhi, their bro grip replaced by a literal chain. Bhodi begs Johnny, appealing to their history together, to release him so he can ride the once-in-a-lifetime fifty year storm wave forming on the horizon. Knowing Bodhi will not come back alive, Johnny releases him. He does this because he loves him. With helicopters circling, Bodhi paddles out and surfs to his death. Johnny walks away, heartbroken, throwing his badge into the ocean, his career and friendship destroyed by the waves.