From this emotional high point, an elaborate montage sequence emerges which details Rocky’s meteoric rise to the heights in boxing social circles, the media, and Madison Avenue. Dissolving back and forth from his ten title defenses (each showing the knockout punch or the decision over his hapless opponents) is Rocky in his various new guises: as magazine cover idol, as spokesman for colognes and American Express, as a nouveau riche family man in his palatial estate with Adrian and their young son. During all this we wee occasional flashes of a new face, that of Clubber Lang (Mr. T), an upcoming contender who observes Rocky’s climb with increasing malice. His own rise is seen parenthetically as he viciously wipes out his challengers to become the world’s number one heavyweight contender.

Rocky’s dream world is hardly perfect, however, as we see his brother-in-law, Paulie begin to make waves. His resentment over Rocky’s fame finally bursts out one night in a bar as he spots an Official Rocky Pinball Machine nestled amongst a cluster of video games. In a drunken rage, he hurls his whiskey bottle through the glass cover bearing Rocky’s name.

Rocky bails Paulie out of the drunk tank, and the two have a strong confrontation. Paulie blurts out his feelings of neglect, and when Rocky shows no pity in return, Paulie attacks with his fists. When Rocky manages to calm him down, they have reached a new bond.

In one of Rocky’s many generous gestures, he agrees to a wrestling match for a charity with Thunderlips (Hulk Hogan) who was supposed to treat Rocky gently – and doesn’t. Rocky gets his revenge by pummeling the 6’8" monster. The match is called a draw.

In the audience of this spectacle is Clubber Lang, who is still silently gauging the career of the Italian Stallion. Previously he was heard to say, after annihilating another opponent, "I want Balboa!" At one of these earlier fights, Rocky’s trainer Mickey soberly observed the malevolent challenger and his vicious fighting style.

Life happily goes on, meanwhile, for the popular champ. He attends the dedication of a statue of himself atop the steps of the Philadelphia Museum of Fine Art where he had hit his exhilarating high during training three years before. It is another media event, with the Mayor and other dignitaries present to bestow the honor on the champ. Rocky is moved, and as he expresses his thanks, the storm clouds appear. Clubber Lang steps forward from the crowd and berates Rocky loudly, accusing him of ducking a title fight with him and calling him a coward. When Lang brings Adrian into the issue, asking her to come with him to find out what its like to be with "a real man", an enraged Rocky is ready to settle things on the spot. He is restrained, and Mickey who has been watching the exchange, uses the opportunity to abruptly tell hi protégé that is he through with the entire business. He leaves Rocky angry and confused.

Rocky rushes back home, where Mickey has been living, to find him packing his bags. The resulting soul-searching talk reveals that Mick thinks Rocky could never beat Lang, simply because Rocky has made the biggest mistake a fighter can make; he’s become "civilized". He also implies that all of Rocky’s fights since winning the title were carefully arranged: Rocky had been carried all along. Mickey reasons that the combination of Rocky’s tameness and Lang’s savagery will cost Rocky the crown. The two reconcile, however, and the fateful fight is on.

Rocky’s physical regiment in this section of the film is, not surprisingly, light. He does some occasional footwork and punching of the speed bag, surrounded by requests for pictures, autographs, or just a peck on the cheek from his admiring fans. He refuses no one. In the meantime, we are shown Clubber Lang as he punishes himself in his solitary workouts. We realize now that Mickey was right: Rocky has lost much of his fighting heart, and Lang is just the fighter to take advantage. The similarity between this contrast and that of Rocky preparing for Apollo Creed in Rocky is unmistakable.

The concern Mickey feels towards this fight and his boy’s attitude is very apparent. When the big night arrives, we see the two dressing rooms: Rocky’s relaxed and confident (save for Mickey), and Lang’s, where he literally prowls like a lion in a cage, snarling at the media and even smashing TV lighting equipment in his desire to get at the champ. The two entourages meet in the hallway on their way to the arena, and pandemonium erupts, Lang begins taunting Rocky, and in the crush of people they attempt to go after each other. Suddenly Mickey is stricken and collapses. They manage to carry him back into the dressing room, and Rocky, seeing the shape his trainer is in, tries to call the fight off. He decides to go ahead and has Adrian stay behind to nurse Mick. Rocky steps forward into battle unprepared and thoroughly shaken emotionally.

The arena, in Rocky’s Philadelphia ballpark, is solidly for their hero. Rocky is deflated and hesitatingly comes out unsure of Mickey’s condition. During the introductions, Apollo Creed makes a guest appearance in the ring (just as Joe Frazier did in the original Rocky). When he goes to Lang to shake hands, Lang disdains him and even tries to goad him into fighting as well. Apollo takes it in stride and goes to Rocky’s corner, saying quietly, "Give us all a present and drop this chump."

The fight begins, and Lang’s fury is unleashed. Rocky starts off like Rocky, pounding Lang with huge blows and coming up empty. Lang goes to work and shows he is a lethal, brutal fighter by slamming the champ around and decking him at the bell. Rock is battered and hurt.

Round two has Rocky in serious trouble as Lang attacks him unmercifully. He goes down again in shocking defeat, and this time he is counted out. The new champ has silenced the world.

Beaten, Rocky makes his way back to the dressing room and the fallen Mickey who is failing fast. Kneeling at his side, Rocky sobs and speaks to his friend in his dying moments, telling him that the fight ended in the second by a knockout, sparing Mick the truth as he slips away into death.

Rocky lapses into a severe depression. He wanders around Philadelphia, and on his motorcycle stops at the statue of himself. In a fit of anger, he throws his helmet at the statue. Rocky winds up at Mickey’s gym late that night. As he forlornly reminisces in the empty hall, a voice is heard in the darkness. Apollo steps out of the shadows.

The two former champs converse. Apollo makes a pitch to snap Rocky out of his funk and get him back on the winning track. He vows to train Rocky to fight Lang again, the way Apollo thinks he should be fought. He slowly convinces him that he can regain the fire Rocky thrived on in his earlier days, and tells him he must again have the "eye of the tiger", mainly by starting from scratch. The two men are now inseparable allies.

Apollo takes Rocky on a trip, along with Adrian and Paulie. Their destination is a mystery to the Balboas until they arrive. It turns out to be a seedy section of Los Angeles, where Apollo has his boxing roots. He takes the group to his old gym and they meet Duke (Tony Burton), Apollo’s former trainer from the first two films. The gym is crowded with young fighters training in earnest. Apollo tells Rocky to look around, to see the spirit burning in all the young hopefuls. The "eye of the tiger" is everywhere.

Rocky hesitatingly begins to train in these new surroundings.  His lack of enthusiasm is reminiscent of the period in Rocky II when Adrian is in a coma and Rocky cannot function.  Apollo tries to change the style of his new pupil, to be fast of foot and hand, to sting instead of maul.  Rocky, forever the unpolished brawler, cannot adjust to the dancing Apollo preaches or to the new approach in general.

The lethargy continues.  Meanwhile, Apollo and Paulie seem to be developing a grudge match of their own.  Paulie is constantly making snide comments on the new conditions in general and the "coloreds" in particular.  After getting a taste of the good life, Paulie keeps mentioning the "no class" atmosphere.

Apollo tries taking their training to the beach, amid comments from Rocky that "Mick wouldn't do it this way."  Rocky still can't get into the swing of things, as Apollo gets aggravated in their foot races on the sand.  After a few sessions of this, Adrian steps forward.  She had been watching her man in his futile efforts and feels compelled to give him some inspiration.  She tells him that he is cheating himself, that only he can bring himself back to what he was.  The inevitable spark is fired as Rocky realizes the truth of his wife's words.  She again has served as the catalyst for Rocky to reach new heights.

"Rocky's Theme" is trumpeted as he now gets down to business.  The montage of him in triumphant return shows him mastering all the tricks Apollo has been trying to drill into him: here he is sprinting side by side with the champ down the beach, there he is dancing with Apollo to the disco beat in the gym, there he is sparring with his new jabbing, stick-and-move style.  When Rocky half-heartedly trained before, we saw that inside his head were images of Mickey being laid to rest, and of himself being laid to rest on a canvas after feeling the wrath of Clubber Lang.  The skeletons have been cleaned out of the closet now.

The fight has come.  Lang is seen at press conferences swearing to punish Rocky worse than before.  (When asked what the rematch will bring, the champ glares back and responds, "Pain.")  Madison Square Garden is the setting as Rocky preps himself with Apollo, who tells Rocky he is the best and has the "eye of the tiger."  Clubber is his usual vicious self.

As the two get their instructions from the referee, they stand nose to nose in center ring.  In the first fight, the same pose brought averted eyes from Rocky, but now he stands up to Clubber's challenging stare.

The bell sounds, and the greatest battle in the Rocky series yet begins.  The former champ attacks with his new technique, and Lang is befuddled.  The ringside announcers are heard, amazed at Rocky's revitalized look.  when Lang takes the offensive, Rocky appears stunned, but after a brutal onslaught he stands back and asks for more, showing his new ability to absorb punishment and fight from the heart.  The first round, as the rest of the fight, is superbly photographed and staged, with each man showing his peak skills.

Rocky pours it on, to cries from Apollo of "eye of the tiger," and subtly lets the bigger Lang punch himself out.  (Lang had weighed in at 237 pounds, Rocky at a svelte 191, 10 pounds off the first fight.)  When Lang seems to have gained the upper hand, Rocky does an about-face and pummels him.  Between rounds, Lang is obviously tired.

Rocky's knockout punch comes on the heels of another barrage from Lang.  The champ goes down in slow motion and Rocky leaps about, on top of the world.