Teenager Alan Abernathy inherits his father's small toy store and soon stumbles upon a shipment of highly advanced action figures called the Commando Elite and their adversaries, the Gorgonites. Created by Globotech Industries, these toys are equipped with sophisticated AI microprocessors originally designed for military applications. Alan befriends Archer, the leader of the Gorgonites, who reveals they are programmed to hide and lose against the Commando Elite. However, the Commando Elite, led by the belligerent Chip Hazard, come to life and view Alan, his family, and friends as obstacles to be eliminated.

As the battle between the two factions intensifies, Alan and his neighbor Christy, along with a few others, find themselves caught in the crossfire. They must devise a plan to stop the increasingly dangerous Commando Elite while protecting the pacifist Gorgonites. The once innocent playthings become hostile predators as they adapt their military tactics to a suburban environment, leading to a conflict that endangers both human lives and property. Tensions escalate as Alan and his allies struggle to contain the situation, realizing that what started as an innocuous toy war has spiraled into a real-life crisis.