The film opens in New York City, 1933, at the height of the Great Depression. Having lost her job as a vaudeville actress, Ann Darrow (Naomi Watts) is hired by troubled filmmaker Carl Denham (Jack Black) to star in his new movie against popular actor Bruce Baxter (Kyle Chandler). Ann signs on when she learns her favorite playwright Jack Driscoll (Adrian Brody) is the screenwriter. As the SS Venture sails across the ocean, they fall in love. A warrant is out for Carl's arrest and Captain Englehorn (Thomas Kretschmann) begins having second thoughts. Despite his attempt to turn around, the ship is lost in fog and crashes into encircling rocks.
Carl and some of the crew take rowboats to the island and explore a seemingly deserted village against a wall. Carl notices a girl with dark-colored skin and offers her chocolate; she bites him, and moments later, a member of Carl's film crew is impaled by a spear. The natives emerge from behind the wall and attack the crew. The matriarch vows to sacrifice Ann to "Kong". Just as Carl is about to be killed, Englehorn and the sailors break up the attack. Everyone returns to the ship.
They lighten the load on the ship to sail away, but Jack discovers Ann has been kidnapped by the natives. On the island, Ann is tied to a wooden drawbridge and lowered to the other side of the wall across a crevasse. The crew arrives too late, as Kong claims Ann and disappears into the jungle. A rescue party is organized; Captain Englehorn gives them 24 hours to return.
The rescue party gets caught in a stampede of Brontosaurus triggered by a pack of Venatosaurus hunting them; four of the party are killed. Bruce Baxter and two others leave the group, intending to return to the ship.
While Ann plays dead, Kong sets her down near some ruins to eat nearby bamboo. Ann tries to escape, but Kong blocks her. Ann realizes Kong's curiosity about her and entertains Kong with juggling and dancing from her theater routine. After being humiliated during an attempt to intimidate her, Kong leaves Ann by herself.
The rescue party stumbles across a log, but Kong attacks, shaking the rescue party into a ravine of giant insects. Baxter and Englehorn rescue what remains of the rescue party. Kong returns to rescue Ann from three Vastatosaurus Rex, and takes her to his mountain lair. They watch the sun set, and Ann attempts to communicate with Kong using sign language, with mixed success.
Jack continues searching for Ann alone, while Carl plans to capture Kong in a desperate attempt to save his job. Jack reaches Kong's lair, but disturbs him from his slumber while freeing Ann. As Kong fights a swarm of giant bats disturbed by the commotion, Jack and Ann try to escape by climbing down a giant vine, only to be pulled back up by Kong. Jack grabs one of the bat's wings and he and Ann fly down, falling into a river. They arrive at the village wall with Kong following them, where Ann becomes distraught by what Carl plans to do. Kong breaks through the gate and is temporarily restrained by the crewmen. He becomes infuriated when he sees Ann resisting while being pulled away by Jack, and follows after Ann to get her back, killing several crew members. He is knocked out by chloroform and taken to New York.
Around Christmas, Carl presents Kong — the Eighth Wonder of the World on Broadway. Ann refuses to participate in the show, which sensationally recreates the capture. Kong becomes enraged when he sees that the headline actress is not Ann, then breaks his chains after several camera flashes from press members anger him further. As the audience flees, Kong destroys the interior of the theater. He spots Jack and attempts to kill him, but Jack escapes. Kong bursts out of the theater and wreaks havoc in Times Square. Jack lures Kong out of Times Square, and drives a taxi with Kong chasing after him.
Kong stops Jack's taxi, knocking Jack unconscious; he then sees Ann, which calms him down. They share a quiet moment on a frozen lake in Central Park, but are interrupted by the military. Kong climbs the Empire State Building. Observing the dawn, Kong repeats the sign for "beautiful" Ann used in his lair, causing Ann to realize his intelligence. Before Ann can attempt further communication, they are attacked. Kong makes his last stand against the Curtiss Helldivers, on the summit of the observation spire. Kong is hit by several bursts of gunfire, and gazes at a distraught Ann before falling to his death. Jack reaches Ann and comforts her. Hundreds of people run to Kong's body. A man tells Carl that the airplanes got him, but Carl replies, "It wasn't the airplanes. It was Beauty killed the Beast