| Director | Joe Dante |
|---|---|
| Budget | $40 million |
| Box office | $87.5 million |
Seeking to diversify, defense contractor GloboTech Industries acquires the Heartland Toy Company. GloboTech CEO Gil Mars tasks his new employees, toy designers Larry Benson and Irwin Wayfair, with upgrading their existing productsa range of soldiers called the "Commando Elite" and a range of friendly monsters called "Gorgonites"into advanced robots capable of "playing back". Faced with a tight deadline, Larry forgoes safety testing and uses GloboTech's X1000 microprocessor as the basis for the toys' programming.
Teenager Alan Abernathy takes a shipment of the toys at his family's toy store and unboxes the leaders, Chip Hazard (of the Commando Elite) and Archer (of the Gorgonites). Archer hides in Alan's backpack and goes home with him, leading Alan to discover that he is sentient. Meanwhile, Chip and his Commandos make war on the Gorgonites, trashing the store in the process. Alan sees the aftermath of the struggle the following day and files a complaint with GloboTech. After receiving the complaint, Larry and Irwin discover that the X1000 was designed for smart munitions guidance and is programmed to learn over time. Mass production was scrapped due to issues with electromagnetic pulse shielding.
The Commandos pursue Alan to his house and attempt to kill him and Archer, but Alan fends them off. He tries to explain the situation to his parents, but is met with disbelief. The next day, Alan finds the remaining Gorgonites hiding in a dumpster at the store. He takes them home and learns that their goal is to reach their homeland of Gorgon, which they believe is in Yosemite National Park. Meanwhile, the Commandos learn of Alan's interest in his neighbor, Christy Fimple, by tapping his phone line. They invade Christy's home and take her hostage to force Alan into surrendering the Gorgonites.
Alan and Archer sneak into Christy's house to rescue her, but run into her Gwendy dolls, which the Commandos have engineered into auxiliary troops. The Gwendys quickly subdue Alan. Archer cuts Christy loose from her bonds, and together they save Alan and destroy the Gwendys before escaping. The Commandos pursue them in makeshift vehicles, but all except Chip are destroyed in a crash. The two teens return to Alan's house to find both their families waiting for them. As Alan tries to explain, Larry and Irwin arrive to warn them of the dangers of the X1000. At that moment, Chip launches a massive attack on the house with a new force of Commandos obtained from a hijacked toy shipment.
Following Larry and Irwin's advice, Alan climbs a nearby power pole in an attempt to engineer an electromagnetic pulse and disable the toys. Chip goes after him in a toy helicopter. Archer comes to Alan's aid, but Chip throws him from the pole to the ground. Alan then thrusts Chip into a transformer, triggering the pulse and destroying him and the remaining Commandos.
Mars arrives during the cleanup the next day. He pays Alan and Christy's families handsomely for their trouble and orders Larry and Irwin to repurpose the Commando Elite for military use. Alan and Christy part on amicable terms, having started dating. Alan later discovers that the Gorgonites survived the pulse by hiding beneath the Fimples' fallen satellite dish. He brings them to Yosemite National Park and sends them out in a toy boat to find their home of Gorgon.