Although thematically Capricorn One is a typical 1970s government-conspiracy thriller with similarities to Hyams's subsequent film Outland, the story was inspired by allegations that the Apollo Moon landings were a hoax.
Minutes before launch, the bewildered crew (Brolin, Waterston, and Simpson) are removed from the capsule and flown to an old abandoned United States Army Air Corps base deep within the desert. The televised launch proceeds on schedule, but the public is unaware that the spacecraft (Capricorn One) does not have a crew.
At the remote base, the astronauts are informed they will fake the television footage from Mars and it is their patriotic duty to participate. Initially they refuse, but authorities imply their careers and the lives of their families are at stake if they do not cooperate.
The astronauts remain in captivity for a period of several months and are filmed "landing on Mars" within a studio located at the base. The conspiracy is known to only a select few NASA officials, but alert technician Elliot Whittier (Walden) stumbles across something absurdly impossible. The television transmissions are arriving ahead of the spacecraft telemetry. He speaks to a journalist friend Robert Caulfield (Gould) about his concerns.
When Whittier mysteriously disappears, Caulfield becomes suspicious and begins investigating the Mars mission, resulting in several attempts upon his life. Meanwhile back at the abandoned military base, the astronauts begin to suspect that if the conspiracy is to be successful, they will eventually have to be eliminated. The astronauts' suspicions become reality when their empty capsule burns up during reentry. The captive astronauts immediately stage a daring escape and attempt to evade military forces in order to expose the conspiracy. Stranded in the desert, they try to make their way back to civilization while being pursued by a pair of helicopters.
In the end, Colonel Brubaker (Brolin) is the only crew member to avoid capture, while Willis and Walker were captured and presumably killed. Caulfield's investigation leads him to the desert, where he finds the military base and the set, and with the help of a cropduster pilot (Savalas), he manages to rescue Brubaker. The film ends with Caulfield and Brubaker arriving at the astronauts' memorial service, exposing the conspiracy in dramatic fashion.