Reporter Christine Everhart alerts Stark to the fact that his company's weaponry has been given to the Ten Rings and is being used to attack Gulmira, Yinsen's hometown, during a Stark Industries charity function. After donning his new armor, Stark takes off for Afghanistan and uses it to save the civilians. F-22 Raptors intercept Stark on his way home. To stop the attack, he gives Rhodes his true identity over the phone.

In the meantime, Stane, who has been supplying the Ten Rings with weapons and staging a coup to remove Stark from his position as CEO of Stark Industries by employing the Ten Rings to assassinate him, meets with the Ten Rings after they have assembled the fragments of Stark's prototype suit. Raza is subdued by him, and he orders the group's murder. Stane's enormous new suit was constructed by reverse engineering from the debris. Stark assigns Potts to breach the corporation's database in an attempt to trace the illicit shipments made by his company. She finds out that although Stane had hired the Ten Rings to kill Stark, they had broken their agreement when they realized they could get to Stark's weapons directly. To notify him of Stane's actions, Potts meets with Agent Phil Coulson of the intelligence agency S.H.I.E.L.D.

Since Stark's miniature arc reactor cannot be replicated by Stane's scientists, Stane ambushes Stark at his house and takes the reactor out of his chest. Stark succeeds in installing his original reactor in its place. Stane attacks Potts and a few S.H.I.E.L.D. agents after they try to arrest him by having him put on his suit. When Stark battles Stane without his new reactor to power his suit to its maximum potential, he is outmatched. After a battle, Stane and Stark reach the summit of the Stark Industries structure, where Stark gives Potts the order to overload the massive arc reactor that powers the structure. Stane is killed when a huge electrical surge that results from this falls on him and his armor and lands in the exploding reactor. The following day, Stark concedes in public that he is the superhero that the media has come to refer to as "Iron Man" at a news conference.

Editor Dan Lebental immediately noticed that the film's last act, which was "basically two robots punching each other," was not working when he began assembling an initial edit of the movie in late 2007. A brief cut of the passage was attempted, but it was unsuccessful since it ended up being "both emotionally unsatisfying and abruptly anticlimactic". Since all of the screenwriters had been freed from their contracts after production, Marvel rehired Marcum and Holloway, who recommended that the action take place earlier in the movie, when Stark was discovering that one of the suit's limitations was that it might freeze at high altitudes.

Favreau was apprehensive to make this adjustment because it would require an extra $6 million. However he was compelled to proceed with this plan due to the approaching writers' strike; Marcum and Holloway turned in a draft of the conclusion on November 4, 2007, the day before the strike started. Since the strike prevented any more rewrites and prevented Bridges from shooting additional scenes, ILM reworked the film's ending using as much of the previously shot material as they could.

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