WARNING: Contains nothing but spoilers
The film opens with the filming of a commercial, where the audience is introduced to the film's protagonists, Sakurai (played by Tadao Takashima) and Kinsaburo (played by Yu Fujiki), two employees of Pacific Pharmaceuticals. The purpose of the commercial is to promote public interest in a TV show that the company is sponsoring. The audience meets the duo's boss, Mr. Tako (played by Ichiro Arishima), who is angry about the low ratings of the show he's sponsoring, during a meeting with Dr. Makino (played by Tatsuo Matsumura), over a discussion of an exotic red berry whose juice produces a nonaddictive narcotic effect. The red berry is only found on a remote island in the pacific, called Faro Island. Dr. Makino says that the natives are unwilling to give up more than a handful of berries because they use the rest of them to placate their god, a giant beast named King Kong. Mr. Tako, much like someone once named Denham, believes that it would be a great idea to use a giant monster to gain publicity. Sakurai and Kinsaburo are chosen to go to the island.
It is after hearing this news, when Sakurai returns home, that the film introduces his sister Fumiko (played by Mie Hama) and her boyfriend Fujita (played by Kenji Sahara). Fujita reveals that he has been working on a new type of wire, one that is stronger than steel, during dinner. He demonstrates the wire's strength when he climbs out of a window and swings around like Tarzan. He tells Sakurai to take some on his trip.
Meanwhile, a United Nations Submarine, the Seahawk, is investigating the unusually warm ocean currents of the Bering Sea. The Seahawk soon crashes into an iceberg. Before help can arrive, the Seahawk is destroyed when its inhabitant wakes up. In the sky, an American rescue helicopter is just nearing the iceberg when Godzilla claws his way out. The radioactive behemoth makes his way to an Arctic military base, where he destroys everything in sight. Godzilla's return gains huge amounts of publicity, with magazines and television reports covering the monster the way modern day tabloids cover a political sex scandal. The only thing that anyone can talk about is Godzilla, which sends Mr. Tako into a rage, especially when one of his employees says that someone is making a movie about the monster.
After reaching Faro island, Sakurai, Kinsaburo, and their guide/translator (played by Senkichi Omura) impress the village chief with their transistor radio. Not satisfied with this, Sakurai then gives everybody cigarettes(!). However, a loud roar is soon heard, and the natives return to praying. The next day Sakurai and Kinsabruo trek into the jungle, returning after being scared by Kong's roar. Later that night, the village is attacked by a giant octopus, who apparently wants some berry juice. Spears and torches are useless against the cephalapod, as well as guns. Things seem hopeless until King Kong arrives, smashing through the giant wooden doors the villagers created to keep him out, and the gorilla soon fends off the octopus. The narcotic effect of the red berry is on full display when Kong drinks it up. Seeing an opportunity to put their god to sleep, a female villager begins an erotic, er, exotic
dance. Kong soon falls asleep. Sakurai and Kinsaburo see this as their opportunity to bring back Mr. Tako's monster.
Back in Japan, Fumiko has read an article in a paper about the ship that Fujita was on being sunk near Hokkaido. Wanting to know if her fiancee is alive or dead, Fumiko decides to head to Hokkaido. Returning home, a very much alive Fujita is met by Fumiko's friend and neighbor, Tamiye, who tells him that Fumiko went to look for him in Hokkaido. Fujita and Tamiye are both informed by a woman and her son, who are preparing to leave Tokyo, that Godzilla has been sighted in Hokkaido. Fujita then rushes to the island to save Fumiko. Hours later, in Hokkaido, the train that Fumiko is traveling on is stopped and everyone is told to flee for their lives as Godzilla is approaching. During the evacuation, Fumiko is left behind and is inadvertently chased by Godzilla. She is eventually rescued by Fujita.
Out on the ocean, Sakurai and Kinsaburo have finally left Faro island, and on a large raft behind them is King Kong. Mr. Tako soon arrives via helicopter and is ecstatic, as the press will now cover King Kong and not Godzilla. But, their ship is soon hailed by a naval vessel, and Mr. Tako is informed that since he did not fill out or have the necessary forms and permits for bringing an exotic animal to Japan, King Kong can go no further, and Pacific Pharmaceuticals will be held liable for damages. Kong, however, wakes up from his drunken nap during this, and he tries to break free of his restraints. Sakurai and Kinsaburo, realizing how ridiculous their whole situation is, decide to detonate the dynamite attached to the raft. Mr. Tako tries to stop them, but he ends up pushing the trigger himself. The dynamite fails to go off, and Sakurai and Kinsaburo decide to just shoot the dynamite instead. The raft is destroyed, and King Kong now begins making his way to Japan.
Later, back in Japan, the JSDF is preparing for Operation: Burial, a plan to bury Godzilla alive in a giant hole. The preparations are interrupted by the appearance of King Kong, and moments later, Godzilla. King Kong and Godzilla face off from a distance, with Kong throwing large boulders at the dinosaur, which only seems to make him mad. Godzilla uses his atomic ray to destroy a helicopter, and then again to scorch Kong's chest. King Kong walks away in defeat. That night, Operation: Burial is ready, and the JSDF lure Godzilla into the trap. Despite going off without any problems, Godzilla is still alive, and he soon escapes his would-be tomb.
The JSDF now begin fortifying an electrical barrier around Tokyo, composed of power lines with a voltage of 1,000,000 volts, to defend against Godzilla, and it is completed by the next day. Meanwhile, King Kong is wreaking havoc across the countryside. When Godzilla approaches the city of Tokyo, the barrier proves to be a success, and Godzilla is discouraged from attacking. However, King Kong soon attacks the city, and surprises everyone when he eats the electrical wires and the city begins evacuating. Fumiko is once again caught in the path of a giant monster, but this time she doesn't get away when King Kong attacks the train that she's riding on. Fumiko falls out of an open door and into Kong's hand. Fascinated with the human woman, Kong throws the train car, still full of people, to the side. Kong eventually makes his way to the top of the National Diet building.
Holding back a furious Fujita, Sakurai quickly thinks of a plan to rescue Fumiko before the JSDF can shoot Kong. With the cooperation of the JSDF, dozens of loudspeakers are setup around King Kong, and some berry juice is put into some rockets. Sakurai begins playing the drums, along with what is apparently a recording of the natives' dance, and the berry rockets are fired. They explode in mid-air, enveloping Kong with a cloud of berry juice that, along with the music, causes him to fall asleep. Fumiko is rescued, but Japan still has to contend with the problem of having two giant monsters rampaging through it. Godzilla has been sighted near Mt. Fuji, so the JSDF decide to pit King Kong against Godzilla in a battle to the death. Using Fujita's wire, Kong is quickly tied up to several large balloons, and is soon towed by a helicopter to Mt. Fuji, where Godzilla awaits.
In the morning, King Kong finally wakes up and the balloons are destroyed, sending him tumbling down and crashing to the mutant dinosaur. The monsters then engage in a duel to the death on Mt. Fuji. King Kong is briefly knocked unconscious by Godzilla, but a thunder storm soon revives the gorilla, who then attacks Godzilla, sending electric currents through his fingertips every time he touches the saurian. The two monsters continue their duel and reach the coastline, eventually destroying the Atami Castle while going at each others throats. The two monsters soon tumble into the ocean, their fight causing tidal waves and an earthquake. Eventually, Kong resurfaces, with no sign of Godzilla. The dinosaur has seemingly disappeared, and King Kong begins his journey back to Faro island.