The plot focuses on Tony Stark (Robert Downey Jr.), an industrialist and master engineer, who has inherited the defence contractor Stark Industries from his father, is in war-torn Afghanistan with his friend and military liaison, Lieutenant Colonel James Rhodes (Terrence Howard) to demonstrate the new "Jericho" missile.Tony Stark is critically wounded in an ambush and imprisoned in a cave by the terrorist group the Ten Rings.The Ten Rings leader, Raza (Faran Tahir), offers Tony Stark his freedom in exchange for building a Jericho missile for the group, but Tony Stark and Yinsen agree that Raza has no intention of keeping his word.Stark and Yinsen secretly build a suit of armour to escape, but the Ten Rings attack the workshop when they discover what Stark is doing.Yinsen sacrifices himself to divert them while Stark's suit powers up.The armoured Tony Stark battles his way out of the cave to find the dying Yinsen, then an enraged Stark burns the terrorists munitions and flies away, only to crash land in the desert, destroying the suit in the process.After being rescued by Rhodes, Stark returns home and builds an improved version of his suit, as well as a more powerful arc reactor for his chest.
(the Iron Monger lifts a car with a family in it)
Iron Monger: I love this suit!
Iron Man: Put 'em down!
Iron Monger: Collateral damage, Tony!
(Iron Man is launched into the sky by Iron Monger's missile, but instead of crashing, he activates his flight repulsors and hovers)
Iron Monger: Impressive! You've upgraded your armour! I've made some upgrades of my own...
(activates jets and starts to fly too)
Jarvis: Sir, it appears his suit can fly.
Iron Man: Duly noted.
Iron Monger: You had a great idea, Tony, but my suit is more advanced in every way!
Iron Man: How'd you solve the icing problem?
Iron Monger: Icing problem?
(his suit begins to fail)
Iron Man: Might want to look into it.
(He raps his fist on Iron Monger's frozen helmet as his suit fails and plummets to the ground)
(after end credits)
Tony Stark: (arriving home) Evening, JARVIS!
Jarvis: (voice distorted) Welcome home, sir...
(Stark stops as he sees a figure in his living room)
Nick Fury: "I am Iron Man". You think you're the only superhero in the world? Mr. Stark, you've become part of a bigger universe. You just don't know it yet.
Tony Stark: Who the hell are you?
Nick Fury: Nick Fury. Director of SHIELD.
Tony Stark: Ah.
Nick Fury: I'm here to talk to you about the Avenger Initiative.