John Henry Irons (Shaquille O'Neal) is a weapons designer who invents high-tech laser guns and protective armor for the United States military. One soldier, Nathaniel Burke (Judd Nelson), decides to show just what Irons' weapons can do and sets one of Irons' laser guns at the highest power setting, firing the device at an abandoned building. However, the weapon backfires and destroys the building the team is situated in. Irons' partner, Susan "Sparky" Sparks (Annabeth Gish), is crushed by a large slab of concrete in the ensuing chaos. In court, Irons reveals Burke's role in the incident and Burke is dismissed from the military. Because his weapons resulted in Sparks becoming a paraplegic, Irons resigns in disgust. Meanwhile, Burke hatches a plot to sell Irons' weapons to criminal gangs, recruiting a video arcade manager to help him carry out this deed.Irons witnesses a bank robbery organized by gang members wielding Burke's modified guns; they escape before he can interrogate them on where they obtained the weapons. The gang does not tell Irons anything when confronted directly in their hideout. Irons visits Sparks in a veteran's hospital and takes her to his own assembled laboratory, where he hopes he and Sparks can create weapons needed to combat the criminals. With the help of Uncle Joe (Richard Roundtree), they forge a suit of armor and the weaponry necessary for Irons to carry out his war on crime and become the vigilante "Steel". However, during his crusade against crime, Irons is pursued by the cops and is forced to return to his lair. The next night, the robbers arrange to rob another bank. Irons, as Steel, tries to stop them, but is hindered by the robbers' weapons. When Irons returns to his grandmother's (Irma P. Hall) house, he is arrested.Meanwhile, Burke prepares to auction off all his modified weapons to every criminal organization in the world over the Internet. When Irons is released from jail, Sparky is captured by Burke's thugs. Irons, as Steel, attempts to infiltrate Burke's headquarters, but is captured himself in the process. When Burke continues with the auction, he is tricked by Steel, which allows him and Sparks to rebel and destroy Burke's lair. Burke himself is killed when a laser he fires towards Steel reflects back towards him due to Steel's suit.