In 1957, a giant metal robot crash-lands just off the coast of Rockwell, Maine. In a hurricane, the Giant is seen by a man in a boat, who narrowly survives by washing up on land by the Rockwell lighthouse. After the big metal man eats a television antenna from a house dangerously close to the woods, the nine year old boy who lives there, Hogarth Hughes, follows its huge footprints into the dense forest. There, the Giant becomes entangled in wires at a power station, shocking it. Hogarth shuts off the power, saving the robot. The next day he finds the robot again, and it follows him to his house. On the way, the Giant discovers train tracks. He attempts to eat them, but Hogarth explains that train tracks are off limits. While trying to fix the tracks, an upcoming train collides with the Giant. Hogarth panics, as the collision caused the robot to lose its arm and a jaw bolt, but he realizes that the Giant is assembling itself back together because of an apparent repair signal from its head. Meanwhile, Kent Mansley, a pompous, self-centered and extremely paranoid U.S. Government agent, arrives in town to investigate the sightings and stories amongst the citizens.
Hogarth hides the Giant in his barn, showing him comic books depicting Superman, another alien visitor who becomes a hero. He also shows him Mad magazine saying funny, he shows him the Spirit saying it's cool, and tells him he's not like the villain he sees on the front of a comic book: Atomo the metal menace, a giant killer robot. Mansley, having investigated the damaged power station and the train wreck, later arrives at their doorstep to ask if he could use their telephone to phone General Rogard about the information he collected. Mansley becomes suspicious of Hogarth after seeing a broken BB gun with Hogarth's name on it in the woods and whilst returning it, Hogarth has to hide one of the Giant's hands (which didn't reconnect) from Kent and his mother in his bathroom. Trying to keep Mansley from discovering the Giant, Hogarth is able to convince a beatnik metal sculptor named Dean McCoppin to have the Giant stay at his scrap yard. Kent eventually rents a room in the Hogarths' house and begins to constantly plague Hogarth with questions about what he knows about the Giant before an exasperated Hogarth has to take him to a diner. There, Kent goes on an angry rant at Hogarth to tell him about the Giant's location, but Hogarth manages to escape to the scrap yard after Kent rushes to the restroom following Hogarth lacing his malt with chocolate laxatives. Hogarth and the Giant have fun together, but later Hogarth explains the concept of life and death after hunters shoot a deer in the woods. The Giant becomes somewhat despondent after he learns that all things, even his new friend, will eventually die.
Mansley finds Hogarth's camera, which he dropped in the woods. He develops the photos, and sees a photo of the Giant. He intimidates Hogarth into revealing the Giant's hiding place by threatening to have him put into care and his mother charged with criminal neglect. To cover up the interrogation with the illusion of a nightmare, Mansley puts a chloroform-laced cloth over Hogarth's nose. Mansley calls General Rogard and convinces him to lead a brigade to Rockwell. After regaining consciousness, and overhearing of the military coming to Rockwell, Hogarth attempts to warn Dean and the Giant. However Mansley, having pre-medidated Hogarth's thoughts, catches him trying to leave and has prevented his escape by nailing Hogarth's bedroom window shut. Mansley eventually falls asleep and thinks he has won, only to find that Hogarth managed to slip out while he was asleep by placing pillows and his army helmet in his bed. When the army gets to Dean's junkyard, Mansley is shocked to see that Dean and Hogarth disguised the Giant as a massive iron statue to throw them off once they got there. Rogard then becomes infuriated with Mansley for wasting his time and government money for nothing, and the army and a dressed-down Mansley leave. After the army leaves, an accident occurs when the Giant's weapons system nearly vaporizes Hogarth who is pretending to shoot the Giant with a toy gun, but Dean saves him and angrily makes the Giant leave Rockwell. Dean later realizes the Giant was acting defensively, and that his weapons were unintentionally activated in reaction to the toy gun Hogarth was using, and assists Hogarth to find the Giant.
The climax ensues when Mansley sees the Giant in town and convinces the military to attack him. The Giant had just saved two young boys from falling off a building in the town, making citizens realize he was good, when the army begins their assault on the robot. In the ensuing pursuit, Hogarth is knocked unconscious. The Giant, misinterpreting this as death, is overcome by his grief and anger, and when Mansley leads another attack on him, the Giant gives into his grief-stricken rage and transforms into a heavily armed battle machine, armed with lethally powerful weapons, and begins to lay waste to the U.S Army forces in retaliation. When Rogard realizes his troops are no match for the berserk Giant, Mansley suggests using a nuclear missile to destroy it, with the USS Nautilus equipped to fire. Rogard consents and they plan to lure the Giant away from the town so as to avoid collateral damage. Hogarth recovers and convinces the Giant to halt its attack: overwhelemed that its friend is alive and mortified by what it has done, the Giant deactivates its weapons. Dean confronts Rogard and tells him that the Giant's weapons went active due to the army's ballistic attacks (which triggered the Giant's defense mechanism). The Army backs down, allowing the Giant to be pacified and calm to seemingly return. Mansley however, having become increasingly frustrated and frantic in trying to convince the General to destroy the Giant, blindly seizes Rogard's radio transceiver and orders the Nautilus to launch, neglecting to realize until too late that the Giant is now in the center of Rockwell, thus putting the town and all of its citizens, as well as the Army and Mansley himself, at ground zero. Mansley makes a cowardly attempt to save himself, but is quickly stopped and arrested. As the townspeople of Rockwell await destruction, the Giant, remembering the death of the deer and Superman's stories of heroism, decides he must sacrifice himself to save the town by intercepting the missile, and says goodbye in his own way to a stunned and sorrowful Hogarth. The Giant takes off toward the upper atmosphere. As he flies near the missile, he recalls Hogarth's words, "you are who you choose to be." Before he collides with the missile, he utters "Superman" and closes his eyes with a smile on his face. The Giant collides at full speed with the missile, which explodes above the atmosphere, apparently destroying the Giant but sparing the town.
A few months later, in the spring of 1958, a memorial statue has been erected in the Giant's honor. Dean and Annie appear to be in a relationship and Hogarth has made some new friends. He is sent a single jaw-screw by Rogard, the only piece of the Giant recovered from the explosion. In bed that night, Hogarth wakes up and sees that the screw has disappeared from the box it was kept in. While searching under his bed for it, he hears a beeping and tapping noise at the window. The screw is bumping against the glass, apparently attempting to travel somewhere. Smiling and realizing what the piece's activity means, Hogarth opens the window and lets it roll away. The movie ends with the Giant's body parts making their way to the Langjökull glacier in Iceland, summoned there by the repair signal in the Giant's head, which opens its eyes and smiles as it reassembles itself.
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