Shaw has played both the Americans and the Russians, and the Russians are shipping nuclear missiles to Cuba. The US Navy create a blockade, and soon the ships are going to meet. Meanwhile, Shaw is onboard a nuclear sub with his team, and is harnessing the power of the nuclear power source using his mutant ability.
The scientist with the feet that are hands (surely he was at the back of the line when mutant abilities were handed out) injects himself with an anti-mutant antedote he has just concocted from Raven's blood ... yet it only accelerates his mutant gene, turning him into a big, hairy monster - The Beast.
Xavier's crew climb onto the jet fighter they have, and fly over to the battle scene.
Azazel has appeared on board the lead Russian ship, killed the crew, and is driving the ship towards the blockade. The good guys show up. Charles uses his power to manipulate one of the Russians on another ship to fire a missile onto the breakaway ship, and save the day.
Banshee jumps out and uses his powers to locate Shaw's sub by Sonar. Erik then musters all his strength to take the sub out of the water, and with the jet they fly away from the blockade, but soon crash onto a nearby deserted island.
There's a stand-off between the mutants. Erik manages to get inside the sub to face off against Shaw. He's losing the fight, until he's able to snatch off his helmet allowing Charles to take control of Shaw and freeze him in time.
Charles begs Erik not to finish him off - but he takes out a coin, and sends it straight through the bad guy's brain.
Outside the sub, both the US and Russian governments decide to fight back against the mutants and launch an arsenal of missiles towards the island. Erik stops the missiles - then turns them back towards the ships. Charles and Erik fight, causing some missiles to miss the targets and fall from the sky, but many are still on target.
The Agent, MacTaggart, fires at Erik - but one bullet is deflected into Charles' spine. Erik is overcome with grief. The missiles fall away into the sea.
Erik and Charles know their friendship is over, and now every mutant must take a side. The bad guys, and Raven/Mystique, join with Erik, while the others remain with Charles - who cannot feel his legs.
Later, Charles is in a wheelchair back at his mansion, where he will open a school for them. He kisses MacTaggart, but then to protect them all he wipes her memory. She is grilled by the CIA or FBI soon, who cannot find out the whereabouts of Charles Xavier ... even though he hasn't moved from the place he was born and you'd think they should really have a record of that.
Erik breaks into the secure government facility to break out Emma Frost in his new costume - and wants her to call him 'Magneto' from now on, because 'Erik' just doesn't sound mean enough.