Tony Stark is the complete playboy who also happens to be an engineering genius. While in Afghanistan demonstrating a new missile, he's wounded and captured.
His captors want him to assemble a missile for them. But instead, Stark creates an armored suit and a means to prevent his death from the shrapnel left in his chest by the attack. Using the armored suit, Stark escapes.
Back in the US, Stark announces his company will cease making weapons, and begins working on an updated armored suit.
Obadiah Stane, second in command at Stark industries, has been selling Stark weapons to the insurgents. When Stark finds out, he uses his new suit to return to Afghanistan to destroy the weapons, and then stop Stane from misusing his research.
Stark and Stane battle, each in their own armored suit. Stark prevails with the help of his personal assistant Pepper Potts.
When a reporter asks Stark about the person in a red and gold armored suit she calls Iron Man, he reveals being that person.