The rugged island of Kunish-shirioshima is the site of the Japanese government's 'Operation Shizuki'. US Navy Commander James L. Brandon has been sent to the island to conduct tests in a remote salt-water lake. With Commander Brandon is his Japanese wife Anna. Brandon has told Captain Kishi to evacuate an Ainu village which borders the lake, which disturbs his wife. The Ainu natives have lived on the island for generations, but Brandon points out the immense benefit to humanity if his anti-saline tests are successful.

The natives practice an ancient ritual, their drums and chants awakening Brandon in the dead of night. He is contemptuous of the natives' belief in a monster living in the lake. He discovers just how serious they are when a masked native attacks him. He beats the man off. The sound of the struggle awakens his wife and Brandon decides not to upset her by telling her about the attack, acting as if nothing happened.

The natives still refuse to evacuate their village. Captain Kishi informs Commander Brandon that he would like to radio Tokyo to request enough troops to force the villagers to leave. For their own safety, the Ainu need to be removed. The main reason the villagers refuse to leave is the Obaki, a huge beast they believe lives in the lake, a monster which will awaken if Brandon's tests are conducted and destroy the world.

Newspapers in Tokyo pick up the story of the monster. When the reinforcements arrive, they come armed with tanks and bazookas, enough weapons to wage a small war - ostensibly to guard against the Obaki. Also arriving are Paul and Shidori Iso, reporters from Japan and old friends of the Brandons.

Anna is disturbed by the way the newspapers are painting Brandon as some sort of ogre for forcing the Ainu to evacuate. Brandon considers this and decides that he will compromise. The villagers can stay but he will use Captain Kishi's troops to keep the natives away from the lake. No one is sure what effect the anti-saline chemicals will have and posting guards is the only way to keep the villagers safe. To make up for denying the natives the lake's fish, Brandon orders that the rest of Kishi's troops be sent out everyday to gather food for the villagers. The decision is applauded by Captain Kishi, who sees it as the best way to put things back in balance. Anna is also delighted by Brandon's decision.

The anti-saline chemicals are fired into the lake the following morning. It should take 24 hours for the chemicals to spread and saturate the lake. First evidence of the chemicals' effect is the toxic effect on fish. Brandon's test results are all negative, each sample having nothing but sediment. The Commander is furious that his experiments may have failed. Fatigued, he half-heartedly jokes that maybe all the mud is the result of the Ainu's Obaki kicking up a fuss at the bottom of the lake.

That night, something monstrous emerges from the lake and enters the wooded shore, terrifying a sentry so badly that he dies of fright. When Brandon and Kishi arrive, whatever scared the soldier is gone. The next say, Kishi's troops discover a giant footprint in the woods. Brandon begins to believe that there might be something to this monster talk. He orders the guard on the lake increased, tanks and bazooka teams moving into position.

Brandon decides to send Anna back to the safety of Tokyo. Before he can drive her to the airport at the city of Oneda, however, the sound of tanks firing shells alarms them. The Japanese forces are firing on a giant monster that is emerging from the lake. None of their weapons have any effect on Varan. Captain Kishi arrives to drive the Brandons to the safety of a remote canyon, away from the battle. Varan soon submerges once more.

It is a brief respite. A few hours later, Varan returns, this time emerging onto the land. Varan wades through the attack and advances on the Obaki shrine. Most of the Ainu worshippers flee, but the priest of the Obaki cult tries to stop Varan with his rituals, and is crushed by the monster. Varan's advance forces the Japanese troops to retreat. Brandon gives the order for fighters to be sent to deal with Varan. The monster's rampage sets the forest on fire and he stalks toward the village, where Brandon's houseboy Matsu lives and Paul and Shidori have been investigating the Obaki cult. Anna feels responsible, that Brandon didn't evacuate the village because he wanted to please her.

Varan stalks unnoticed into the canyon, forcing the Brandons and Kishi to retreat into a cave. Varan tries to get at them, but is unable to reach them with his claws. The fighters finally arrive, dropping flares which distract Varan and lure him away from the canyon. Varan heads out to sea. Brandon worries that Varan might be headed for the city of Oneda, or returning to the canyon. Everyone boards Kishi's jeep, and Brandon begins the long drive to Oneda.

The search for Varan proceeds at sea. When the monster does appear, he attacks a lone fishing ship. Bombers retaliate, but the explosives have no effect on Varan. The monster even snatches a low flying plane from the sky. Unharmed, Varan continues toward Oneda. Brandon hears the report and orders Kishi to inform officials in Oneda about Brandon's surplus anti-saline chemicals stored there and for them to contact Paul Iso, who has learned enough about the chemicals from Brandon to help employ them as a weapon. The message is sent repeatedly with no response. Desperate, Kishi tries to fix their transmitter.

Varan continues toward Oneda, dueling with Japanese cruisers. Like the planes, the ships cannot stop the monster. Varan submerges, avoiding both submarine nets and depth charges.

The evacuation of Oneda begins. That night, Varan appears just off shore. Once again, mass artillery fire cannot stop the beast. Varan attacks the waterfront airport at Oneda, leveling the terminal and hangars. Kishi and Brandon finally contact Oneda, recommending flares be used to distract and delay Varan. Meanwhile, the monster continues his rampage.

The flares are finally dropped; distracting Varan just as it had been hoped. A renewed jet fighter assault wounds the monster and he retreats back to shore. Paul Iso and the Oneda forces load the anti-saline chemicals into a truck, wiring it to explode. Heroically, Paul drives the truck close to Varan and runs from the crazed monster. As Varan reaches the truck, the explosives are detonated, bathing Varan in the chemicals. Mortally wounded, poisoned by the chemicals, Varan heads out to sea to die.

Commander Brandon notes that Varan has not reappeared and states that he is dead, though the surviving villagers insist their devil monster is alive, back at the bottom of the lake. Brandon will try to convince the US Navy to authorize new tests with the anti-saline chemicals at a salt-water lake in California.