In 1944, two World War II fighter pilots, American pilot Hank Marlow and Japanese pilot Gunpei Ikari, parachute onto an island in the South Pacific after a dogfight and engage in close combat, but the fight is interrupted by a giant ape.

29 years later, in 1973, Bill Randa, head of the U.S. government organization Monarch, plans a search for primeval creatures on the recently-discovered Skull Island. He hires a military force commanded by Lieutenant Colonel Preston Packard, tracker and former British Special Air Service Captain James Conrad, and anti-war photographer Mason Weaver. Arriving at Skull Island, Packard's men begin dropping seismic explosives, developed by Randa's seismologist Houston Brooks, to map out the island and prove Brooks' Hollow Earth theory. Suddenly, the air unit is attacked by the giant ape, scattering the survivors across the island. Two groups form between the survivors: Conrad, Weaver, the researchers and one of the soldiers gather quickly, while Randa and the rest of the soldiers land a few miles away. Packard goes in search of the transport helicopter piloted by his right-hand man Major Jack Chapman, intending to use the weapons on board to kill the ape.

Conrad's group eventually encounters the local Iwi natives and an older Marlow. Marlow tells the group of the giant ape named Kong, who protects the island from many predators, including a race of subterranean reptilian creatures christened "Skullcrawlers". The Skullcrawlers are responsible for killing Kong's entire species, leaving him as the last of his kind. The Iwi believe that when Kong dies, the most powerful Skullcrawler, or "the Big One" as Marlow calls it, will awaken and ravage the island. Marlow reveals that he and Ikari became friends, but Ikari was killed by a Skullcrawler some time ago. As Chapman is ambushed and devoured by a Skullcrawler, Conrad's group helps Marlow complete a boat built from parts of Marlow's and Ikari's downed planes. They ride down the river, and manage to secure communication with Packard's group. They regroup with Packard, who insists on searching for Chapman. Marlow leads them through a mass grave, but they are attacked by the same Skullcrawler that killed Chapman, killing Randa and others before dying in a flammable gas explosion triggered by Weaver. Learning about Chapman's death, Packard reveals his plan to kill Kong and avenge his fallen men. Marlow and Brooks attempt to explain that killing Kong would lead to the Skullcrawlers running rampant, but Packard has become obsessed and refuses to listen. The group parts ways, with Packard's group retrieving the weapons from Chapman's chopper and laying a trap for Kong at a nearby lake, while the non-military personnel head back to the boat. While scouting the path ahead, Conrad and Weaver encounter Kong up close and, seeing his true peaceful nature, they resolve to save him. Packard's group lures Kong with the remaining seismic charges and incapacitates him with ignited napalm.

Conrad, Weaver, and Marlow arrive and after a standoff, persuade the other soldiers to spare Kong, but Packard, driven insane by the loss of so many of his men, refuses. "The Big" Skullcrawler emerges from the lake and Packard is crushed by Kong. The Skullcrawler fights and overpowers Kong, but with the humans' help, the ape emerges victorious in the end. The survivors reach the rendezvous point and leave the island as Kong watches. During the credits, Marlow returns home, reuniting with his wife, meeting his son for the first time, and watching a Chicago Cubs game on television.

In a post-credits scene, Conrad and Weaver are detained and recruited by Monarch. They are informed by San Lin and Brooks that Kong is not the only monster king to roam the world and are shown archive footage of cave paintings depicting Godzilla, Rodan, Mothra, and King Ghidorah. As the screen cuts to black, Godzilla's roar can be heard.