In 1999, 45 years after Godzilla’s first attack, Lieutenant Akane Yashiro, a mazer-cannon technician, is unable to kill a new member of Godzilla’s species during her first fight. She is made a scapegoat for the military’s losses during the battle and transferred to a desk job. During the battle, it was discovered that Godzilla is immune to mazer fire, rendering all of the Japanese military useless against him should he return. Scientists, including single father Tokumitsu Yuhara, are gathered to build a bio-mechanical robot from the original Godzilla’s skeleton. Four years later, the cyborg Mechagodzilla, named Kiryu, is finished and inducted into the Japan Self-Defense Forces along with its human pilots as the Kiryu Squadron. Akane becomes the main pilot for Kiryu. However, memories of Akane’s actions during the original fight still linger, and one of her squadron mates, 2nd lieutenant Susumu Hayama holds her responsible for the death of his brother.
A while later, Mechagodzilla is shown to the world, and the complete system that controls the unit is explained. Controlled remotely from a control craft that resembles a very large jet fighter with VSTOL capabilities, it can be remotely recharged from the ground using microwaves that are relayed through a power system on one of the command aircraft, and then beamed back down to the robot. For the end of the presentation, its greatest and most powerful weapon, the freezing Absolute Zero cannon, is shown. At the same time, Godzilla shows up once again, and Kiryu is launched into battle. In the midst of the first battle, Kiryu’s soul is awoken by Godzilla’s roar and brings with it the memories of the original Godzilla’s death. As if possessed by the original Godzilla, Kiryu proceeds to destroy the city around it after Godzilla retreats to the ocean floor. Horrified, the Kiryu Squadron can only watch and alarm as the rampaging cyborg destroys more city property than Godzilla did. After one hour, Kiryu runs out of energy and is brought back to headquarters for further work.
All the while, Akane attempts to settle matters involving Hayama, Tokumitsu, and his distressed daughter, Sara; who sees Kiryu as a being with a right to life and that it should befriend Godzilla rather than battle it. Later, Godzilla attacks again. After repairs are made, Kiryu is released from the air and hits Godzilla with immense speed. At this point, Godzilla and Mechagodzilla face off in a head-to-head battle where each combatant sizes up its opposite and exchange powerful blows that also devastate the cityscape around them. Kiryu gains the upper hand and beats down Godzilla. Kiryu proceeds to launch the Absolute Zero, but Godzilla fires its atomic breath.
During the course of the impact, Kiryu is disabled, and the remote piloting system completely taken off-line. In an effort to continue the fight and press what advantage over Godzilla they still have, Akane orders the pilot to land his command craft so that she can make her way to Mechagodzilla and take control from its internal backup cockpit. Now under direct human control, Kiryu rises from the ground one more time and closes in on Godzilla for a final blow, hoping to use the Absolute Zero cannon at point-blank range. The two titans collide, and Akane uses Kiryu`s thrusters to propel it and Godzilla out to sea before the cannon fires, freezing a huge portion of the ocean around them.
After the blast clears, Godzilla is shown to be alive but with a huge gash in his chest, steadily walking back into the ocean. Kiryu is heavily damaged, missing its right arm, and the Absolute Zero cannon is devastated. With the Kiryu Squadron successful in defeating the monster, Godzilla retreats. In a post-credits scene, Akane agrees to have dinner with Tokumitsu and Sara and gives Kiryu one last salute for his aid in battling Godzilla.