Endless warfare and environmental pollution have resulted in the frequent appearance of monsters. The Earth Defense Force (EDF) is established. Mutant humans with extraordinary physical capabilities are discovered and are organized into an EDF troop called the M-Organization. Their main opponent is Godzilla, first sighted in 1954. After repeated battles, Godzilla is captured in a crevasse at the South Pole and buried under an avalanche of ice. The EDF ship Gotengo, commanded by Captain Gordon, battles and destroys Manda but in the process, the ship is wrecked and Gordon is dismissed from the EDF. At M headquarters, mutants Ozaki and Kazama spar before their next mission.
The prologue of the film acknowledges the events of the first Godzilla film, while inventing its own timeline, explaining that the capital of Japan was moved from Tokyo to Osaka. The film takes place in an alternate universe with advanced technology, explaining that in 1966, Godzilla attacks the first Japanese nuclear plant in Tokai, Ibaraki Prefecture. After this, a section of Japanese Self Defence Force was dedicated to fight Godzilla, and was called G-Graspers. In 1996, clean plasma energy replaced nuclear energy, however this did not deter Godzilla from attacking. Plasma energy is also banned, due to the fact that Godzilla attacked the original plasma energy reactor.
In 1992, journalist Kenichiro Terasawa (Kosuke Toyohara) is writing a book about Godzilla and learns about a group of Japanese soldiers stationed on Lagos Island in the South Pacific during World War II. They were unintentionally saved from a group of American soldiers by a mysterious dinosaur known as "Godzillasaurus" in February 1944. In 1954, the island was destroyed by a hydrogen bomb test and the radiation from the bomb mutated the dinosaur into Godzilla.
News reporter Ichiro Sakai and photographer Junko Nakanishi take pictures of a wreckage caused by a typhoon. They uncover a strange, bluish-gray object in the debris, not knowing its significance. Later that day, a giant egg is discovered on the shore. The local villagers salvage it, and an entrepreneur of Happy Enterprises named Kumayama buys the egg from the local villagers. Instead of letting scientists study the egg, Kumayama wants to make it into a large tourist attraction. Later, Sakai and Nakanishi are informed that the strange object they found is extremely radioactive. (It is later hinted that this is a skin particle from Godzilla.
In the aftermath of Godzilla's attack on Tokyo and his later imprisonment at Mt. Mihara. a team of scientists discovers cells left in the rubble by the monster and collects them. A group of American militants takes a sample of their own. They attempt to escape with them, but are killed by a lone assassin codenamed SSS9, who steals the sample and departs. He boards a cruise liner and heads to the Republic of Saradia to deliver the cells to the Saradia Institute of Technology and Science. The president of the institute wants to use the cells to merge with genetically modified plants, hoping to transform Saradia's deserts to vast greenery and end the country's dependence on oil wells for wealth. Dr. Genshiro Shiragami and his daughter, Erika, are enlisted to aid with the ambitious project. However, a terrorist bombing destroys the institute's laboratory, ruining the cells and killing Erika.
The Japanese fishing vessel Yahata Maru is trying to find its way to shore in a horrible storm while near an uninhabited island, when a giant monster appears out of the island and attacks the boat. A day later, reporter Goro Maki finds the vessel intact, along with its sole survivor Hiroshi "Kenny" Okumura.
After a volcanic eruption on Daikoku Island, the Yahata-Maru Japanese fishing vessel is caught in strong currents off its shores. As the boat drifts into shore, the island begins to erupt, and a giant monster lifts itself out of the volcano. A few days later, reporter Goro Maki is sailing in the area and finds the vessel intact but deserted. As he explores the vessel, he finds all the crew dead except for one young man called Hiroshi Okamura, who has been badly wounded. Suddenly a giant Shockirus sea louse attacks him but he is saved by Maki who kills it with a cleaver.
Police Detective Shindo (Yosuke Natsuki) is assigned to guard Princess Selina Salno of Selgina (Akiko Wakabayashi) during the Princess' visit to Japan, due to a suspected assassination plot. Although Shindo is smitten with Selina's photograph, her plane never makes it to Japan, as it is destroyed by a bomb en route. At exactly the same time a meteorite shower draws the attention of Professor Murai (Hiroshi Koizumi), who along with his team of scientists strikes out into the wilderness to examine the largest of the meteors, which has magnetic properties.
In the 1960s, two astronauts, Fuji and Glenn, are sent to investigate the surface of the mysterious "Planet X". There they encounter advanced and seemingly benevolent human-like beings called the Xiliens and their leader The Controller. The aliens usher the astronauts into their underground base, and moments later the surface is attacked by a creature the Xiliens call "Monster Zero", but which the astronauts recognize as King Ghidorah, a planet-destroying monster that had attacked Earth once before. The monster eventually leaves, but the Controller states that Ghidorah has been attacking repeatedly, forcing them to live underground in constant fear. He requests to borrow the Earth monsters Godzilla and Rodan to act as sentries against Ghidorah's attacks, in return for the cure for cancer (the English dub says the formula can cure any disease). The astronauts return to Earth and deliver the message.
After Yata (Toru Ibuki) is lost at sea, his brother Ryota (Toru Watanabe) steals a yacht with his two friends and a bank robber, the crew runs afoul of the giant lobster Ebirah, and washes up on the shore of an island, where a terrorist organization manufactures heavy water for their purposes, as well as a chemical that keeps Ebirah at bay. The organization, known as the Red Bamboo, has enslaved natives from Infant Island to help them, but the natives hope to awaken Mothra (now a full-grown moth metamorphosed from the larva that appeared in Ghidorah, the Three-Headed Monster) to rescue them.
The microscopic alien lifeform Hedorah feeds on Earth's pollution and grows into a poisonous, acid-secreting sea monster. After it sinks an oil tanker and attacks Dr. Toru Yano and his young son Ken Yano, scarring them both, Hedorah's toxic existence is revealed to the public. Ken Yano has visions of Godzilla fighting the world's pollution, and insists Godzilla will come to humankind's aid against Hedorah.
A team of scientists are trying to perfect a weather-controlling system. Their efforts are hampered by the arrival of a nosy reporter and by the sudden presence of 2-meter tall giant praying mantises. The first test of the weather control system goes awry when the remote control for a radioactive balloon is jammed by an unexplained signal coming from the center of the island. The balloon detonates prematurely, creating a radioactive storm that causes the giant mantises to grow to enormous sizes. Investigating the mantises, which are named Kamacuras (Gimantis in the English-dubbed version), the scientists find the monstrous insects digging an egg out from under a pile of earth. The egg hatches, revealing a baby Godzilla. The scientists realize that the baby's telepathic cries for help were the cause of the interference that ruined their experiment. Shortly afterwards, Godzilla arrives on the island in response to the infant's cries, demolishing the scientist's base while rushing to defend the baby. Godzilla kills two of the Kamacuras during the battle while one manages to fly away to safety, Godzilla then adopts the baby.
Ichiro Miki (Tomonori Yazaki) is a highly imaginative but lonely latchkey kid growing up in urban (and at that time, polluted) Kawasaki. Every day he comes home to his family's empty apartment. His only friends are a toymaker named Shinpei Inami (Eisei Amamoto) and a young girl named Sachiko (Hidemi Ito). Every day after school, Ichiro is tormented by a gang of bullies led by a child named Sanko Gabara (Junichi Ito). To escape his loneliness, Ichiro sleeps and dreams about visiting Monster Island. During his visit he witnesses Godzilla battle three Kamacuras and Ebirah, a giant sea monster. Ichiro is then chased by a rogue Kamacuras and falls into a deep cave, but luckily avoids being caught by Kamacuras. Shortly afterwards, Ichiro is rescued from the cave by Godzilla's Son, Minilla. Ichiro quickly learns that Minilla has bully problems too, as he is bullied by a monstrous ogre known as Gabara.
When the Japanese freighter Eiko-maru is destroyed near Odo Island, the Bingo-maru is sent to investigate, only to meet the same fate with few survivors. A fishing boat from Odo is also destroyed, with one survivor. Fishing catches mysteriously drop to zero, blamed by an elder on the ancient sea creature known as "Godzilla". Reporters arrive on Odo Island to further investigate. A villager tells one of the reporters that "something large is going crazy down there" ruining the fishing. That evening, a ritual dance to appease Godzilla is held during which the reporter learns that the locals used to sacrifice young girls. That night, a large storm strikes the island, destroying the reporters' helicopter, and an unseen force destroys 17 homes, kills nine persons and 20 of the villagers' livestock.
American reporter, Steve Martin (Raymond Burr), is brought to a hospital with dozens of maimed and wounded citizens. In flashback, Martin recalls stopping over in Tokyo, where a series of ship disasters catches his attention. When a survivor finally washes up on Odo Island, Martin flies there for the story with Tomo Iwanaga (Frank Iwanaga), a representative of the Japanese security forces and learns of the island inhabitants' belief in a sea monster god known to them as "Godzilla", which they believe is causing the disasters.