Deadpool ambushes a convey taking a recently released prisioner back from jail in a freeway. He fights and kills several henchmen with his weapons and swords, and finally corners his target, a man called Francis, at a bridge, after a motorcycle chase. As Deadpool is about to kill Francis, he is interrupted by Colossus, who was send by Professor Charles Xavier to arrest Deadpool for the destruction caused on the freeway. Francis uses the distraction to escape, what angers Deadpool. He tries to fight Colossus, but fails and escapes back to the house he shares with a elderly blind woman called Blind Al.
As Deadpool recovers from his wounds thanks to his extraordinary healing factor, we learn that he is Wade Wilson, a former mercenary who used to spend most of his time hanging out with his friend Weasel at a bar owned by former mercenary Patch and having sex with a prostitute named Vanessa Carslyle, whom Wade eventually fell in love with.
One day, Wade found out that he had terminal Cancer and decided to leave Vanessa, promising only to return after he had found a cure. After several unsuccesful attempts, Wade went back home, fully prepared to die, when he was approached by a mysterious man who identified himself as a representative of the United States government. The man offered Wade a chance of be healed and become a super-hero, which he accepted.
Wade was taken to the a mysterious place called the Workshop, where he is introduced to a man named Ajax and his henchmen Garrison Kane, Wyre and Sluggo. Ajax doesn't feel pain. Kane has robotic limps. Sluggo is super-strong and Wyre can grow metalic wires from his fingers.
It becomes clear that Wade was tricked into becoming a guinea pig for illegal experiments with humans. After months of unspeakable torture, Wade finally develops a healing factor, but at a high cost: His body is horribly desfigured and his sanity is taken away.
One day, Wade was finally able to escape and destroy the Workshop. For it's illegal experiments on unwilling humans, Ajax was arrested. He was the one Wade tried to kill on the freeway, but failed. Ajax finally reunites with Kane, Wyre and Sluggo and prepares to finally take revenge on Deadpool.
After escaping the Workshop, Wade tries to commit suicide, but finds out he can't due to his new powers. After several attempts to harm himself in order to find out just how indestructible he really is, he returns to Patch's bar, where Weasel encourages him to use this powers to go back to being a mercenary.
Taking inspiration from a Death Pool on Patch's bar and a Spider-Man mask turned from the inside out, Wade Wilson becomes Deadpool.
Back to modern times. Ajax, Wyre, Sluggo and Kane enter Patch's bar and use their powers to kill everyone in it, including Patch. All of Wade's friends, except for Weasel, are killed. Ajax and his men then proceed to take over the mercenary scene in the city, taking down everyone who stands on their way.
Weasel tells Deadpool what happened. Deadpool, who believes that Ajax can cure him, tracks Wyre down to a local Strip Bar, where they fight. Wyre is defeated and killed by Deadpool, who also finds out Vanessa is working as a Stripper at the bar. He tries to talk to her, but bails out.
Meanwhile, Ajax kidnapps Vanessa and sends Deadpool a SMS telling him where to find him for them to settle their score.
After being outfitted with guns by Weasel, Deadpool heads to Ajax's penthouse when he is approached by Colossus, who offers him help as a apology for accidentaly allowing Ajax to escape earlier. Deadpool agrees.
Together, they arrive at Ajax's lair, where Sluggo await. Colossus and Sluggo fight. Meanwhile, Deadpool enters Ajax's lair and kills all of his guards. Kane is send to bring him down. Deadpool fights and defeats Kane.
He heads to Ajax's office, where the two of them fight, all while Vanessa, strapped to a torture machine called the Punch Bowl, watches helplessly. Colossus finally manages to bring Sluggo down, but the entire building collapses.
Colossus emerges from the debris and rescues Vanessa. Meanwhile, Deadpool retreives Ajax's badly injured body from the debris. Colossus tries to talk Deadpool out of killing him, but Deadpool refuses and sends a bullet straight to Ajax's head. Killing him.
Deadpool and Colossus settle their score. Deadpool promises to be on the lookout. Then, he and Vanessa make up and become a couple once again.
Meanwhile, the man who recruited Wade to the Workshop prepares to leave the country by plane. He tells a aisle that he has been assigned to a new project. His name is finally revealed: Dr. Killbrew.
As the credits roll, Deadpool and Blind All finally manage to assemble a IKEA furniture piece (who quickly collapses); and Amy Winehouse (Wade's beat on the Death Pool) is ran over by a bus.
THE END.