The Not So Distant Future. Poland. Erik Lensherr, also know as "Magneto", leader of the Brotherhood of Mutants, goes to the celebrations of the Auschwitz Concentration Camp Liberation 60th anniversary. He walks trough the city, eventually stopping before the iron gate that he bended with his mutant power to control metal via magnetic manipulation many years prior, when his X-Gene first manifested itself.
1941. Auschwitz. Erik is tortured by a Nazi scientist called Dr. Kleinmen who wants to discover the source of Erik's powers, but fails. Erik is released after one year being experimented on. Shortly thereafter, the Red Army releases the Auschwitz captives. In the process, Erik meets and falls in love with a Gypsy girl named Magaa.
10 years later, Erik and Magda are married, live in Russia and have a daughter named Anya. Erik works as a construction worker and, one day, he comes across one of the Nazi officers that tortured him in Auschwitz at a bar, disguised as a Russian citizen. The man claims that he's part of a secret society know as "The Fourth Reich", and that there are several Nazi hidden all over the world, preparing to strike. The man prepares to kill him when Erik's powers, which he still doesn't fully control, kick in and stab the man with a knife. Erik returns to his home, but finds out that the townspeople, believing him to be a warlock, burned it down with Magda and Anya inside. His powers kick in again and he murders the leader of the mob by smashing his face with a metal pole before escaping.
3 years later, Erik is in Paris, where he approaches a Nazi hunter called Noah Wesestein. He wishes to become a Nazi hunter as well, but Wesestein claims that he doesn't have the necessary mindset and instead gives him a card of a medical house in Israel that helps Holocaust survivors deal with their traumas. Erik ignores Wesestein's advice and steals his files on identified Nazis hidden in South America. He then travels to Buenos Aires, where he targets a Nazi disguised as a banker. However, the man has bribed the police to ignore his activities, so Erik is alone.
There, he is approached by a CIA agent named Owen Graves, who wants to hire him to eliminate Nazis hidden in South America, where the american government is not welcome. Erik refuses at first, but after another failed attempt to expose the banker, which leads to a confrontation with Marines, he accepts, but only if, in exchange, CIA locates Dr. Kleinmen and allows Erik to kill him. They agree and send Erik after a Nazi disguised by as a dentist. The man kills himself when Erik confronts him, and Erik finds a map leading to a abandoned warehouse.
He goes there without notifying Graves and finds a Fourth Reich weapons depot. He destroys it and kills all the men inside, including Dr. Kleinmen's former second-in-command. He also finds out the Fourth Reich is operating in Israel. Meanwhile, in Washington, D.C., Congressman Robert Kelly hears about the warehouse attack and accuses CIA of killing men suspected of being Nazis without the proper trial. To avoid bad publicity, the Nazi hunting operation is called off and Erik is left on his own again.
Believing that he indeed is sabotaging his chances to get revenge, Erik travels to Israel and seeks help at the medical house, where he meets a young american doctor called Charles Xavier. They become good friends and discover that they are both mutants. Erik finally understands that it wasn't Dr. Kleinmen that gave him his powers. Meanwhile, it is revealed that Dr. Kleinmen is working alongside CIA, studying the blood of captured mutants to create a Supersoldier Serum. He already has three succesful test subjects: His second-in-command, who has a healing factor, and two German twins with superstrenght and invulnerability. Dr. Kleinmen wants Erik's blood and sends his second-in-command to get him. The second-in-command attacks the medical house and destroys it, killing several people. Erik is furious and interrogates the man until he reveals CIA has been funding Kleinmen all along before Erik kills him. Charles stays behind.
In Washington, D.C., Erik attacks Graves and fights CIA agents that had prepared a trap for him, because they knew he'd find out sooner or later. He fights them off with Xavier's help and they discover Kleinmen's headquarters location. They raid the place before Kleinmen can carry out his plan to use the Serum to create a genetically engineered "Master Race" and take over the world, destroying the Twins and saving the captive mutants, that were being drowned by Kleinmen, in the process.
Erik kills Kleinmen despite Xavier's claims that he shouldn't, and the two decide to transform Xavier's old mansion in New York City into a school for mutants. Their first students are the released captives, that include Sabretooth, Mystique, Toad, Cyclops and Storm. They also create a powerful machine called Cerebro, that amplifies Xavier's telepathic powers and allows him to locate mutants on a worldwide scale, and set to recruit their first official student, Jean Grey. However, Erik already knows that his vision of how mutants and humans differ from Xavier's and that there will come a time that a rift is open between them. He is shown recruiting Sabreotooth, Mystique and Toad to his "side" and developing a helmet that allows him to block Xavier's powers. Rejecting his human identity, Erik decides to adopt a new name, more fitting with his status as a Homo Superior. He is know Magneto.
Back in the Not So Distant Future, Magneto is approached by Xavier, now confined to a wheelchair. They talk about how, the more things change, the more they stay the same, as they watch Robert Kelly, now a Senator, defending the Mutant Registration Act that'll be discussed by the Senate the following week in Washington. Jean, now a woman, will be opposing to his views about the need of the Act. Magneto leaves after saying the Xavier will see him again soon enough.
The events of X-Men unfold in the following days.