Sometime after the events of The Avengers, a haunted Tony Stark has obsessively built several Iron Man suits in his mansion. This causes friction with his girlfriend, new Stark Industries chief Pepper Potts. In a flashback to New Years Eve 1999, Tony, with his scientist paramour Maya Hansen, arrogantly avoids crippled scientist Aldrich Killian, who wants Tonys backing in his endeavor Advanced Idea Mechanics (AIM).
In present-day America, a string of bombings by terrorist the Mandarin has left intelligence agencies bewildered at the lack of forensic evidence. When Stark Industries security chief Happy Hogan is caught in one such attack, Stark overcomes his stupor and issues a televised threat to the Mandarin, who responds by destroying Tonys home with helicopter gunships. Pepper and Maya, who had come to warn Tony, survive the attack. Tony then finds himself in rural Tennessee after his artificial intelligence JARVIS follows a flight plan from Tonys investigation into the Mandarin. Tonys experimental armor lacks sufficient power to return to California, and the world believes him dead.
Teaming with Harley, a precocious 10-year-old boy, Tony investigates the remains of a local explosion bearing the hallmarks of a Mandarin attack. He discovers the explosions were triggered by soldiers from the Extremis program, an experimental treatment intended to allow its users to recover from crippling injuries. However, if a users body cannot properly metabolize Extremis, the user heats up and explodes. After veterans started growing unstable and exploding, their deaths were used to cover up Extremis flaws by manufacturing a terrorist plot. Tony witnesses Extremis firsthand when Mandarin agents Ellen Brandt and Eric Savin attack him.