The film starts off with Raleigh narrating about the kaiju first coming and then it goes to Trespasser's attack on August 10-15, 2013. The military eventually killed Trespasser with three tactical nukes, but over the course of the next years more kaiju came out of a portal called the Breach at the bottom of the Pacific Ocean and humanity built robots called Jaegers as nukes would kill them faster.
The story then jumps to February 20, 2020 where the Anchorage Shatterdome has detected the largest category 3 kaiju, Knifehead ever recorded appears. Gipsy Danger is deployed to fight Knifehead. However, a ship called Saltchuck is in the water where the kaiju is. Yancy pushes the ship toward safety and punch the kaiju twice and then they proceed to do a Double Hammerfist on the kaiju. Yancy charges up the right plasma cannon and shoots it three times, supposedly killing Knifehead. The Shatterdome picks up Knifehead, who wasn't killed. Knifehead surprise attacks Gipsy. Raleigh charges the left plasma cannon, but Knifehead rips off Gipsy's left arm before it can charge up. Knifehead then breaks through Gipsy's Conn-Pod and kills Yancy. Raleigh then uses the right plasma cannon while Knifehead beats up Gipsy and kills Knifehead. Raleigh is unable to finish piloting Gipsy and crashes on Anchorage's icy shore. After that we see the Anchorage Shatterdome on closing day where the UN tells Marshal Stacker Pentecost that Jaegers are losing and we need defense. He is given eight more months of funding for the Jaegers.
The story jumps into 2025 where Raleigh is working on the Alaskan Coast Defense wall to keep out the kaiju. When Sargent Pentecost asks Raleigh to join the last of his rangers in one last assault against the breach to close it. Raleigh then accepts the Pentecost's offer. Raleigh meets Mako Mori at the Hong Kong Jeager Bay and the two become co-pilots. In a trail run Raleigh learns how Pentecost saved Mako's life when he was a ranger and why he is so protective of Mako. Two Kaiju come out of the breach (Code named Leatherback and Otachi). Three other Jeagers (named Cherno Alpha, Crimson Typhoon, and Striker Eureka) battle the two Kaiju but two get destroyed and the third Jeager's circuits get fried. Pentecost then sends in Gypsy Danger which kills Leatherback and Otachi and saves the short circuited Jeager (Striker Eureka).
Two scientists, Newton and Hermann, discover that the plan to send the bomb into the breach (the reason why Pentacost recruited Raleigh again) won't work they rush back to tell the pilots of Gypsy Danger and Striker Eureka their discovery. Then the tell them that the have to ride a Kaiju into the breech. Three Kaiju come out of the breach (Code named Raiju and Scunner) and the first ever catagory 5 ever shows up (Slattern). Raleigh and Mako kill Raiju with Gypsy's sword. Striker Eureka detonates her payload and blows up and kills Scunner but only mortally wounds Slattern. Gypsy rides Slattern into the breach and kills it. Mako and Raleigh eject from Gypsy right before they detonate Gypsy's nuclear core which closes the Breach.