After confessing his identity as Iron Man to the world, Tony Stark (Robert Downey Jr.) comes under fire from the United States Government who demand he hand over the powerful weapon that is the Iron Man suit. As the Government attempts to create a duplicate suit with the assistance of Stark’s rival, Justin Hammer (Sam Rockwell), Tony’s long time friend Jim Rhodes (Don Cheadle) is put center stage in the conflict. Meanwhile, a mysterious and dangerous foe emerges in Ivan Vanko (Mickey Rourke), who creates an alternate and powerful persona known as Whiplash in order to exact revenge on the Stark family once and for all… it isn’t long before he unites with Hammer in an effort to destroy Iron Man. With the arrival of his shady new assistant (Scarlett Johansson), and persistent recruitment attempts from S.H.I.E.L.D. director Nick Fury (Samuel L. Jackson), Stark needs all the help he can get in order to overcome the obstacles.

Jon Favreau said it was his intent to create a film trilogy for Iron Man, with Obadiah Stane (Jeff Bridges) becoming Iron Monger during the sequels. However, Stane became the main villain in Iron Man after a meeting between Favreau and various comic book writers, including Mark Millar. Millar argued the Mandarin, whom Favreau originally intended to be the main villain, was too fantastical.  Favreau concurred, deciding “I look at Mandarin more like how in Star Wars you had the Emperor, but Darth Vader is the guy you want to see fight. Then you work your way to the time when lightning bolts are shooting out of the fingers and all that stuff could happen. But you can’t have what happened in Return of the Jedi happen in A New Hope. You just can’t do it.”

In an interview with USA Today, director Jon Favreau revealed that the sequel is set six months after the events of Iron Man. Favreau also discussed how their version of Iron Man’s comic book nemesis the Mandarin “allows us to incorporate the whole pantheon of villains”. He also mentioned that S.H.I.E.L.D. will continue to have a major role.

During development, Favreau said the film would explore Stark’s alcoholism, but it would not be “the Demon in a Bottle version”. Downey said, while promoting the first film, that Stark would probably develop a drinking problem as he is unable to cope with his age, the effects of revealing he is Iron Man, as well as Pepper getting a boyfriend. Before filming began, Downey revealed that while the film was not an adaptation of the Demon in a Bottle storyline from the comic book series, it was more about the “interim space” between the origin and the Demon story arc.