A terrorist called The Mandarin (Ben Kingsley) is exploding bombs. After Tony Stark calls him out on television, saying that he'll stop him, the Mandarin sends his men to Tony's house and they nearly kill him. But Tony is still traumatized from the events of The Avengers and has panic attacks. Because Pepper was almost killed because of him he takes off and goes underground, befriending a young boy. Eventually, we find out who the Mandarin is and who Tony's true enemy is...
I enjoyed this more than the 2nd movie, not as much as the first and not nearly as much as the first Avengers movie. I thought it funny that they literally made Tony's love interest, Pepper Potts, into a Hot Pepper.