After the match, Apollo calls in the favor he made Rocky promise him in return for training for the rematch. Together, the two aging greats step into the right of a small, out-of-the-way gym just so Creed can see for himself who's really the better fighter. 

Hours later, they walk out, battered and bruised, but content. For both of them, their little sparring session was supposed to be the last time either would ever have to put on their gloves. Now, they seem ready to give up the spotlight and settle down to the easy life of retirement. But appearances are often deceiving... 

Arriving home, the champ finds Rocky Jr. trying to capture his uncle Paulie's birthday on video-tape. Deciding that Paulie has no real friends the Balboas give him one: a household robot that can put up with any amount of griping Adrian's brother might dish out. Rocky and his son study various academic subjects via computer programs, and, all in all, the champ is happily getting settled into his new lifestyle. 

Apollo, on the other hand, is becoming more and more dissatisfied. Spending the rest of his days fishing is not exactly what he planned to do with his life. Turning on his portable TV, he sees a press conference held by the newly arrived, giant, Russian amateur boxer, Ivan Drago, and his party. He listens to the announcement of their plans to enter professional boxing. His eyes ablaze, Apollo quickly heads for Rocky's house. 

Balboa is surprised to see his former trainer, and even more surprised when Apollo asks if he's going to fight the Russian. Rocky responds that he wasn't planning on it. "Great," Apollo says, "then I think I've come up with a great idea ..." 

Meanwhile, Drago's manager, Igor Rimsky, is taking great pride in showing off the giant's gym to the American press. The training room is spotless and antiseptic, looking more like a laboratory than a place for athletes to get in shape. Rimsky goes on at great length at how all of this aids in improving their man's performance, while Drago, hooked to electrodes and computers, waits for an order to be given. When asked what the result of all this is, Rimsky replies, "Whatever he hits, he destroys." 

That night, Apollo explains to the Balboa clan his plans to get back into the ring for an exhibition match with the Soviet boxer. Believing this will be a tremendous media event, Creed feels that this is America's big chance to make Russia look bad for a change. Adrian thinks that the real reason is that he can't stand to be forgotten, and despite her arguments, Rocky agrees to do his friend a favor and be in his corner. 

Apollo quickly calls a press conference of his own, but hardly anyone attends, and those that do can't understand why an aging fighter retired for five years should want to do this. Afterward, Rocky tries to cheer him up, even though he's starting to think that maybe Adrian was right. Creed snaps back, sharply telling Balboa that they -he and Rocky- are not like other people. "We're never gonna fit into normal life - never - 'cause we're the warriors ... and without a war to fight, a warrior may as well be dead too!" 

The following day, Apollo and Rocky storm into the Soviet training facility where Creed openly challenges Drago to a fight.  Soon, a new press conference is held with both Apollo and Drago as the star attractions. Reporters are out in droves covering the announcement of this exhibition battle, though they hear more talk of patriotism and propaganda than they do of boxing. Still, Apollo seems to be getting what he wants. 

Adrian tells her husband that she's got bad feelings about all this, but Rocky feels he's got to stand by his friend. All over Las Vegas, people catch sight of Balboa putting Apollo through grueling exercises - running, jumping rope, sparring. Rocky has his doubts, though, and wants to wait until they can get in a few more weeks of training, and can have the time to learn more about their opponent. Apollo is firm, thought. This fight means something to him and it will go on as scheduled. 

The night of the big fight, Apollo shows up in his old Uncle Sam outfit, while Drago appears with his usual hammer-and-sickle symbols. Tension fills the air. The bell rings and Creed is out, slamming away at the giant, apparently to no avail. The Russian behemoth starts landing solid punches of his own, and they're all painfully on target. By the end of the round, it looks bad for Creed. 

Rocky wants to stop the fight, but Apollo refuses to let it end, despite the punishment he's taken. Round two begins and Drago is back brutally smashing the very life out of the American. Rocky wants to know if he should throw in the towel, but Creed won't let him, diving heroically back into combat. The Soviet is momentarily stunned, but he starts launching blow after blow to Apollo's head, nearly taking it off. One more punch and Creed drops to the mat, never to rise again. 

In the days that follow, Rocky is consumed with guilt, feeling he let Apollo die. Adrian can see clouds of vengeance in Rocky's eyes, and warns him to let it go, but the champ is firm in his resolve. He tries speaking to the United Boxing Federation about battling Drago, but they refuse on the grounds that the Russian has yet to have one professional fight and is therefore still considered an amateur. At a press conference, Rocky announces that he is giving up his title and his professional status so that he can fight Drago. Christmas in Russia is agreed upon date and place. 

Training soon begins for the hero from Philadelphia, and impediments spring up almost immediately. Adrian won't support his vengeance-seeking, sportscasters start asking provocative and insulting questions, well-meaning patriotic fans appear almost constantly around him and a couple of government agents, concerned with national prestige, even try to persuade him not to go through with it. 

Finally, Balboa decides to get away from everything by training in Russia. Adrian tries to talk Rocky out of it, but her husband is determined, realizing that Apollo was right, that fighters are a breed apart and there are certain things they have to do. 

Arriving in the Soviet Union, Rocky, Paulie and Apollo's old trainer, Duke, are provided with a ramshackle barn in the desolate Russian countryside, along with a couple of nosy secret policemen. Paulie and Duke complain a little about their living conditions and the biting winter weather, but they both recognize that it's just what Rocky needs. 

Serious training begins in earnest for the two warriors, although their methods differ wildly. Drago, ever attached to electrodes and constantly monitored by computers, works out with steel and chrome equipment. Like a machine responding to the flick of a switch, he snaps out punches at blinding speed whenever ordered. 

Rocky, on the other hand, uses only whatever material is available. He climbs rope, does pull-ups on wooden beams, jogs past Russian peasants and struggles mightily with a rock-filled sled, dragging it up the side of a mountain. He is almost ready, but he's missing one thing. When Adrian shows up unexpectedly, to support him emotionally, his heart is restored, and he is once again at his physical and emotional best. 

The Soviet arena is filled with sports commentators from all corners of the globe, members of the Kremlin, interested spectators and, above all else, tension. The entire world is watching, waiting anxiously to see who will be the victor of "World War III." 

Rocky, Paulie, and Duke enter the arena to the sounds of booing and jeering. Drago and Rimsky are cheered wildly. The Russian National anthem is played, and the referee gives the men the instructions and sends them to their corners. With the bell about to ring, it feels like all hell is about to break loose. Seeing Adrian in a front row seat, Rocky nods to her and takes off his robe. The crowd goes wild at the sight of his red, white, and blue trunks, the same ones Apollo used to wear, but Drago is unimpressed. 

The bell rings and the two rush at each other. Rocky gets in some early punches, but Drago is quickly on top of him. Balboa, though, is using all the skills he learned from Mickey and Apollo and is managing to stand up against the storm of fists. Drago can't believe that anyone can still be standing after such punishment and his self-confidence crumbles. 

Round after round flies by. Rocky scores a fantastic hit on his enemy's face, causing him to bleed for the first time, bringing down more of his resolve. The fight becomes more intense. 

By the fourteenth round, both battlers are bruised and wounded, but neither is about to back off. As the two head back to their corners, the crowd is now wildly cheering for Rocky. Rimsky is thoroughly disgusted with Drago and, for all intents and purposes, deserts him. 

The bell rings again and the two men dart out of their corners. It looks bad for Rocky though. All but dead on his feet, he takes one crushing blow after another from Drago. The crowd starts chanting, "Rocky, Rocky..." Suddenly, Balboa comes alive and smashes away at the behemoth, knocking him down and finally out of the ring. 

The audience goes out of their minds. Adrian runs up to her husband, kissing him and she says, "I'm so proud of you!" Paulie takes out an American flag and drapes it around his friend's shoulders, while adoring fans rush into the ring to lift Rocky onto their shoulders, crowning him the champion of the world.