Full story
Tony Stark is the billionaire genius running Stark Industries, the biggest weapons maker in America. He lives for parties and cars, with his assistant Pepper Potts handling everything and his friend Colonel James Rhodes close by. In Afghanistan he shows off the Jericho missile. On the way back, his convoy is ambushed by the terrorist group the Ten Rings, and Tony is hit by shrapnel from a bomb with his own company's name on it.
He wakes up in a cave with an electromagnet wired to a car battery in his chest, keeping the shrapnel away from his heart. The man who saved him is Yinsen, another prisoner. Their leader, Raza, demands that Tony build them a Jericho. Instead, Tony and Yinsen build a miniature arc reactor and a crude iron suit. During the escape, Yinsen sacrifices himself to buy time. Tony torches the weapons stockpile, flies a short distance and crashes in the desert, where Rhodes finds him.
Back home, Tony announces the company will stop making weapons. Obadiah Stane, his father's old partner, says it will sink Stark Industries and quietly works to push him out. Tony locks himself in his workshop, improves the reactor and builds a red and gold suit, after a string of tests that go wrong in funny ways. Pepper gets his old reactor as a gift, framed in a little case.
At a party, a reporter shows him photos of Stark weapons in the hands of the Ten Rings, attacking Yinsen's village. Tony suits up, flies to Afghanistan and saves the villagers. On the way back, U.S. fighter jets nearly shoot him down, and he comes clean to Rhodes. He also learns that Stane has been selling weapons to the terrorists and set up the kidnapping. Stane recovers the old suit from the mountains, paralyzes Tony and pulls the reactor out of his chest. Tony survives thanks to the old reactor Pepper kept.
Pepper finds Stane's files and goes to S.H.I.E.L.D. agent Phil Coulson. Stane climbs into a giant suit, the Iron Monger, and fights Tony on the roof of company headquarters. Tony has Pepper overload the building's big reactor, and Stane dies in the blast. S.H.I.E.L.D. writes him a cover story, but at the press conference Tony drops the cards and says, “I am Iron Man.” After the credits, Nick Fury shows up at his house to talk about the Avengers Initiative. That idea is left hanging.