Tony Stark threw what he believed would be his last birthday party and promptly proceeded to get drunk whilst wearing the Mark IV armor, forcing his friend Lt. Colonel James Rhodes to don the Mark II armor and subdue him. Rhodes flew off with the Mark II and turned it over to the United States Air Force. General Meade ordered Rhodes and Justin Hammer to weaponize the suit.
Disgraced, Stark was approached by Nick Fury of S.H.I.E.L.D., who provided him with a chest of his father's old artifacts that could hopefully be used to find a cure for his Palladium poisoning. Reviewing the film reels in the chest, Stark discovered a message from his father that led him to the original 1974 diorama of the Stark Expo: in reality, a disguised diagram for the molecular structure of a new element. Stark hand-built a Particle Accelerator with the aid of his computer J.A.R.V.I.S. and synthesized this new element, creating a new triangular chest Arc Reactor that cured his poisoning.
At Stark Expo, Justin Hammer unveiled his new military drones, captained by James Rhodes in a heavily-weaponized version of the confiscated Mark II armor. Unfortunately, it was soon discovered that Whiplash has complete control of both the drones and Rhodes' new armor, and Stark arrived just as they went on the attack. Stark took to the skies to get the fight away from the Expo. Rhodes and the Air Force Drones chased Stark while the Army and Navy Drones bombarded him from the ground. Stark was able to destroy all of Drones chasing him but was attacked by Rhodes and the two careened into the Oracle Dome.
Meanwhile, Happy Hogan and Black Widow raced to Hammer Industries Headquarters to stop Vanko. By the time they arrived and defeated the guards, Vanko had already departed for the Expo in a new, more powerful suit of armor; however, Black Widow was able to give Rhodes control of his armor again so that he and Stark could fight Vanko together.
The two armored allies got back on their feet and were surrounded by the remaining Drones. Taking out several Drones with small arms fire and hand to hand techniques, Stark used a laser in his wrist to take out the remaining Drones. Vanko arrived and Rhodes tried to fire the Ex-Wife Missile at him, but it was a dud. The two attacked Vanko, but he used his whips to subdue them both. Stark told Rhodes to fire their repulsors at each other at the same time, causing a massive explosion that took Vanko down.
Stark and Rhodes approached Vanko, who laughed and told them "You lose". Stark realized that his armor and the Hammer Drones were equipped with self-destruct charges. As they began to go off, Stark raced to save Pepper Potts, rescuing her at the last minute and taking her to a nearby rooftop. She quit her CEO position, and she finally gave Stark a kiss. Rhodes witnessed the kiss and jokingly said they looked like two seals fighting over a grape.
At a debriefing, Nick Fury informed Tony Stark that while Stark is "unsuitable" for the Avengers Initiative, S.H.I.E.L.D. wanted Iron Man as a consultant. Stark agreed on the condition that Senator Stern presented him and Colonel James Rhodes with their medals for bravery.
Calling the Battle the "Stark Expo Incident", Pepper Potts had a press conference announcing that the Stark Industries would pay for all damages occurred to New York City. She went further to announce the creation of the Stark Tower.
- There is an alternate ending of this battle where Whiplash found Pepper Potts and held her hostage until Iron Man managed to save her.