The film opens with Percy recalling the tale of Thalia and her courageous sacrifice to safeguard her friends. A young Annabeth and her companions, Luke and Grover, find themselves fleeing to Camp Half-Blood while being relentlessly pursued by monstrous foes. In a selfless act, Thalia sacrifices herself to ensure their escape into the camp, leading Zeus to transform her into a pine tree, which creates a magical barrier that protects future half-bloods from facing her dire fate.
Switching to the present, Percy participates in a camp competition against Clarisse La Rue but ultimately loses after helping another camper, leading to further taunting from Clarisse. Soon thereafter, Chiron and Mr. D investigate a breach in their defenses caused by a Cyclops, which turns out to be Tyson, Percy's half-brother. As they deal with the fallout, Camp Half-Blood comes under assault from a formidable Colchis Bull that has invaded their sanctuary. With teamwork from Tyson, Annabeth, and Clarisse, Percy manages to vanquish the beast.
Following these events, Luke Castellan makes a sudden appearance, confronting Percy in an attempt to lure him to his cause. When Percy declines, Luke vanishes, alluding to a prophecy that Percy is unaware of and hinting at his previous betrayal involving Zeus's stolen lightning bolt.
Realizing that Thalia's tree has been poisoned, endangering their protection, Percy seeks guidance from Chiron regarding the elusive prophecy. He later consults the Oracle, learning about Kronos, the malevolent father of the three eldest gods—Zeus, Hades, and Poseidon. Kronos, who was so wicked that he devoured his children, was ultimately captured and imprisoned in Tartarus, but it is foretold that he will rise again, and only a half-blood child of the oldest gods can thwart him.
Percy, realizing he fits the description of the half-blood, partners with Annabeth and Grover to pursue a solution to save Thalia's tree. They propose a quest to retrieve the Golden Fleece, which has the power to heal. Despite their hopes, Mr. D selects Clarisse to lead the quest, leaving Annabeth and Percy disheartened. Eventually, Percy persuades Grover and Annabeth to join him on the quest, and despite objections, Tyson insists on accompanying them.
Their journey begins with a perilous encounter on the Chariot of Damnation, where Percy pressures the drivers for their guidance, leading to a treacherous ejection into the streets of Washington D.C. As they navigate further, Grover is abducted by Chris Rodriguez and taken to Luke, leading Percy to suspect that Luke also seeks the Fleece for unknown reasons.
Amidst their trials, the trio meets Hermes, Luke's father, who provides them with a mystical thermos that unleashes winds and a magical box sealer. Using these gifts, they steal away on a Hippocampus to Luke's yacht, The Andromeda, but are captured and imprisoned. Luke reveals his intentions to revive Kronos and unleash destruction upon the Olympians, having retrieved Kronos's sarcophagus from Tartarus.
With determination, Percy manages to assist them in their escape using the box sealer. However, their next encounter sees them swallowed by Charybdis, luckily finding Clarisse trapped within. They manage to escape together and arrive at Circeland, the lair of Polyphemus, a ferocious Cyclops guarding the Fleece. With Tyson’s timely intervention, they successfully retrieve the Fleece and trap Polyphemus in his cave.
As they celebrate their success, Luke confronts them again, demanding the Fleece. In a tragic turn, he shoots Percy, only for Tyson to heroically take the hit, plunging into the depths below. Luke begins the revival of Kronos, prompting Percy to reflect on the gravity of their situation and Annabeth’s encouragement to rise to the occasion as a leader.
In a climactic battle against Kronos, Percy learns that his sword, Riptide, is the "cursed blade" foretold in the prophecy. Utilizing it, he manages to vanquish Kronos, resulting in an anguishing moment as Grover and Luke are regurgitated back into the fray. Just as they begin to feel victorious, tragedy strikes again when Annabeth is fatally wounded by a Manticore, but her life is restored thanks to the magic of the Fleece.
Returning to Camp Half-Blood, Clarisse places the retrieved Fleece atop Thalia's tree, and during the night, Annabeth stands guard. When morning arrives, the group rejoices as Thalia rises, fully healed and returned to her former self.
In the closing moments, Percy comprehends that with Thalia being a child of Zeus, the prophecy concerning the fate of Olympus might involve her as well. The final shot reveals the ominous glow of Kronos' sarcophagus, hinting at the enduring threat that still looms over them.
