Six months after the end of the first movie, Tony Stark (Robert Downey, Jr.) has used his Iron Man armor to bring about a negotiated peace treaty between the major super powers of the world, and his immense popularity with the general public is only furthered when he fulfills his father's dream by opening the "Stark Expo", to showcase all the latest inventions that will benefit the world. Stark is, however, still vilified by the United States government, and Senator Stern (Gary Shandling) in particular, who demands that he hand his armor technology over for military application. Stark refuses, publicly shaming rival Justin Hammer (Sam Rockwell) in the process by highlighting his own failed attempts at recreating the technology. All is not well in Stark's life, however: he has discovered that the palladium in the arc reactor keeping his heart beating has begun to poison his body, slowly killing him, and all attempts to find a substitute element have failed. Slowly going off the rails as a consequence of what he believes to be his impending death, he appoints his former personal assistant Pepper Potts (Gwyneth Paltrow) CEO of Stark Industries, replacing her with Natalie Rushman (Scarlett Johansson).
While racing in Monaco, Stark is attacked by Ivan Vanko (Mickey Rourke), who has constructed a miniaturized arc reactor of his own, including whip-like attachments harnessing the electrical energy. Defeating Vanko with the aid of his Mark V armor (a transforming briefcase), Stark discovers that Vanko is the son of disgraced Russian physicist Anton Vanko, who collaborated on the first arc reactor with Stark's father Howard (John Slattery). Vanko is promptly broken out of jail by a revenge-seeking Justin Hammer, who puts him to work fashioning a line of "Iron Drones" that he will use to upstage Stark at his own Expo.
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