NOTE: This spoiler sent in by Steve K.

The movie starts with a team of Japanese excavators doing research in a cave in Iwo Jima in the present day. A man finds something while digging, and the teams continues to dig. We then flash back to Iwo Jima just before the invasion.

We see the main character Saigo with two friends digging trenches on a beach. We hear a voice over of one of Saigo's letters to his wife where he wonders if he's actually digging his own grave. Saigo complains to his friend that he doesn't care about the island and that the Americans can have it for all he cares. Their commanding officer overhears them and asks them what they're talking about. Saigo quickly lies and says he was saying that they could go home once they defeat the Americans. The officers asks Saigo's friend if that was true; Saigo's friend lies with him and confirms this.

Elsewhere, a plane lands with the new general from Japan, General Kuribashi. In a voice over we hear one of his letters to his family, lamenting the fact that he had neglected to take care of the kitchen floor prior to leaving for Iwo Jima. Kuribashi is greeted by an old admiral who only thinly disguises his dislike for the general. Kuribashi's first move is to inspect the island on foot; he comes across Saigo and his friend being beaten by their commanding officer for their unpatriotic words. Kuribashi tells the officer to stop hitting soldiers and to punish them by cutting their rations instead; his reasoning is that they don't have enough soldiers as is to be beating the ones they do have.

Saigo tries to mail a letter back home to his wife. The mail officer changes some of his words so that the letter will have a better chance of passing army censorship Kuribashi sees a child playing on the street and thinks of his own son. He then orders his subordinant Fujita to evacuate all civilians from Iwo Jima.

Later, Saigo and his company are taking pieces of wood off houses to use. An officer rides past them with a horse; the men stop momentarily from their work to applaud his skill. This man is Baron Nishi, who competed for Japan in Equestrian in the 1932 Olympics in Los Angeles. Baron finds Kuribashi on the beach, and they chat about their mutual love of horses. Kuribashi invites Nishi to eat at his table later. While they're eating, Nishi tells the General that the Japanese main fleet was decimated at the Marianas; Kuribashi is surprised that high command from Tokyo did not inform him that there would be no air or naval support of the defence of Iwo Jima.

Kuribashi tells the men to abandon their beach trenches and to instead dig tunnels in the mountains. The admiral and the other officers disagree, but grudgingly obey Kuribashi. The admiral tells one of his officers, Ito, that Kuribashi is more suited to be a paper-pusher than a general.

The following day, Saigo and his company are eating when Kuribashi and Fujita come on the beach. Kuribashi commands Fujita to pretend to be a landing American soldier and to run as if he were invading. While Fujita does that, Kuribashi runs ahead and scouts out the best positions to place guns against the invasion. Saigo and his friend wonders if the general has gone crazy. One of the men comments that he heard Kuribashi was American-educated and wonders aloud whether he's a traitor. Saigo says that his American education means he knows how to beat the Americans. Before they pack up to go back to work, Saigo's friend (the one who lied for him earlier) says he has a stomach problem and needs to use the washroom.

Later in the caves, a new man comes to Saigo's company. His name is Shimizu and he is about to sit down when Saigo tells him not use an empty spot; that spot had been the spot of Saigo's sick friend, who we learn had died earlier. After asking the new man a few questions, the company suspect that his is a spy from the Japanese home guard sent to report unpatriotic activities. Saigo recalls how the home guard had come to his bakery before he was in the army and had taken all the sugar, then their flour, then their metal tools. This leads to everyone in the company giving Shimizu the cold shoulder.

The next day Saigo is eating when he flashes back to the day he was drafted into the army. His wife had answered the door to find a Japanese soldier and three women who proudly announce that Saigo had been chosen to represent the Japanese Imperial Army. Saigo accepts this without protest, but Saigo's wife begs them not to take him away, but the women respond that they have all sent their husbands and sons to war, and that Saigo should be proud that it is his turn.

Saigo's wife cries after they leave, as she is aware that nobody who is drafted ever returns. Saigo tries to comfort her and then whispers to her belly (his wife is pregnant with their first child) that he promises to come back alive.

Later in the day, Saigo's commanding officer goes over the battle plan with his company. He asks his men why they will win; Shimizu stands and replies that American soldiers are weak-willed and let their emotions get in the way. The commanding officer tells his men to target American medics. An American air strike then destroys many tents and sends Saigo and the other Japanese soldiers running for cover.

Meanwhile, Kuribashi, who is aware that he is being undermined, sends back the admiral to Tokyo. Before leaving, the admiral tells his officers that Kuribashi cannot be trusted to lead. Some officers like Nishi are loyal to Kuribashi, others like Ito feel he is a defeatist.

The day of the invasion comes around and there is almost non-stop bombing. Saigo is forced to empty the shit-can of his company. Going outside, he sees hundreds of American ships offshore. As the American soldiers land, Kuribashi orders the men to hold their fire until the American troops have stepped inland. Eventually, they fire and take out many of the first-wave American soldiers. However, American planes bomb the positions of the defensive guns; the machine gun that Saigo's unit is manning is bombed and destroyed.

Saigo runs a message to the main officer that his position needs a new gun and overhears that Kuribashi orders all forces defending the mountain in front of the beach to pull back and regroup. However, Saigo's commanding officer ignores the order and demands the men kill themselves, as they have already been defeated. One by one, they pull grenades and blow themselves up; Saigo's superior officer shoots himself in the head. Eventually, only Saigo and Shimizu are left. Saigo starts to run and Shimizu, who earlier was crying while holding a grenade, pulls a gun on him. Saigo convinces Shimizu that Kuribashi wants them to retreat for now, and that their suicides now would be meaningless, as the battle was not yet completely lost. Shimizu is convinced and goes along with Saigo. As they run through the tunnels, they witness Japanese soldiers being torched by flamethrowers and other soldiers turning on each other in delirium.

Saigo and Shimizu run into Ito's group of soldiers. Ito is bent on ignoring Kuribashi's orders and retaking the mountain; however, his first attempt to break out of his cave is thrown back. Seeing that a group of men didn't charge with his group, he demands to know why they stopped; it turns out that group was Nishi's group, and Nishi refused to attack when Kuribachi had ordered a retreat. Disgusted, Ito picks up 3 mines and decides to go out by himself and blow up an American tank. Saigo and Shimizu join up with Nishi's unit and head northward. Ito lies down with a bunch of dead bodies and waits for a tank to roll by.

Nishi's group hold out for a day and capture a wounded American for information. Nishi orders the last of the medicine be used to treat the wounded American. The men say that an American would never help a Japanese person; Nish responds that none of them know that. Nishi then bonds with the POW while speaking english to him; he shows him a picture of himself at the 1932 Olympics in Los Angeles. The man eventually opens up to Nishi and tells him that he's from Oklahoma.

Ito continues to lie in the field waiting for an American tank. He screams out and demands the Americans come for him. Nobody hears him.

Meanwhile, Kuribashi asks Fujita where all the messengers are, and Fujita responds that none of the messengers have returned. Kuribashi then flashes back to when he was leaving America; he was the guest of honor at a lavish going-away party thrown by his friends where he was presented with a silver colt 1911 handgun. While eating, one woman asked him if America and Japan went to war, if he would fight against her husband (her husband was the one who presented the pistol to Kuribachi). When Kuribachi said he would have to as his duty to Japan, the woman remarks to her husband that he would be a dead man, implying that she felt her husband would not do the same thing.

The following morning, Nishi finds that the American prisoner has died of his wounds. He finds a letter on him from his mother and reads it aloud to his troops. In the letter the woman prays for his safe return home; the men, including Shimizu and Saigo, are taken aback at how much the letter sounded like their own letters. A bomb blast then blinds Nishis eyes, he tells his 2nd-in-command Okubo to take the remaining troops north now and link up with Kuribashi. As the men leave, Nishi slowly gets his rifle and shoots himself from under the chin.

The men eventually march all night and take cover in another cave; Okubo dies during this run. In their tunnel, Shimizu tells Saigo his reason for being in Iwo Jima; we see in a flashback he was kicked out of the home guard because he showed mercy to a family and refused to kill their dog, which was barking loudly. Saigo comments that he doesn't hate Shimizu anymore, and Shimizu starts to cry again. Shimizu laments that he was filled with all the lies about Americans being savages and asks Saigo if he'll surrender with him. Saigo agrees and they plan to sneak out one at a time. Shimizu goes first but runs into a guard; however, the guard demands that Shimizu take him along too. As they run, Saigo can only watch as an officer shoots the guard who was trying to surrender.

Ito wakes up and sees that no Americans are near him. He slowly dumps the mines he was wearing and wanders off.

Shimizu makes it across a hill and surrenders to an American patrol. The patrol already has another prisoner; Shimizu sits down with them and the other man invites him to come to his house when the war is over. The patrol moves on and leaves two men to guard Shimizu and the other prisoner. One of the soldiers says that guarding the two prisoners would make them vulnerable to attack; he then shoots the other prisoner and Shimizu in cold blood.

The following morning, the last Japanese soldiers make their way toward Kuribachis base. They come across Shimizu's dead body, with white flag still in hand. The commanding officer says that this is a lesson for anyone who tries to surrender; Saigo cries over Shimizus body.

The group finally makes it to Kuribachi, who has just received word that no reinforcements will be coming. While visiting the soldiers in the cave, Kuribachi recognizes Saigo; Saigo tells him that the order to retreat was the 2nd time Kuribachi had saved him (the first being the beating). Kuribachi then responds that all things come in threes. Saigo writes a letter to his wife just for the sake of writing, as he's aware it'll never reach her. As the Americans draw nearer, Kuribachi and Saigo talk, and Saigo tells Kuribachi that he has never met his daughter. As the last Japanese soldiers prepare for a suicide attack, Kuribachi says to Saigo that all things come in threes and that Saigo was to stay behind and burn the important documents.

The last Japanese attack and are mowed down by the Americans; Kuribachi is wounded and is dragged away by Fujita. Meanwhile, Saigo burns documents, but finds a bag of undelivered letters. Instead of burning them, he decides to bury them with a shovel.

Ito is found sleeping in a hole by American soldiers. He surrenders without a struggle.

Fujita drags Kuribachi into a field, where Kuribachi asks him to cut of his head with a sword, which is a noble death in Japanese culture. Kuribachi reminisces about driving in America alone; a voice over has him telling his son in a letter that he was lonely all by himself there. Fujita raises his sword, but he is killed by an American sniper. Saigo then shows up (the sniper disappears) with his shovel and Kuribachi begs him to bury his body so the Americans will not find it. He then uses his last energy to shoot himself with his pistol. Saigo then drags Kuribachi away to be buried.

An American patrol arrives and inspects Fujita's body. An American ogles at the samurai sword and takes it. Likewise, the squad leader finds Kuribachi's silver pistol on the floor and tucks it in his belt. Saigo returns and wordlessly surrenders. As the Americans wonder how to get Saigo to put down his shovel, Saigo sees Kuribachis pistol and suddenly starts swinging his shovel wildly at the American. After being ordered not to shoot him, Saigo is knocked out by an American soldier from behind.

Saigo is carried by a stretcher to where the American wounded are lying on the beach. He opens his eyes and is emotionless.

The film then goes back to the modern times and ends with the excavators watching letter after letter pour out of the bag they had just dug up.