In the middle of the forest, three young demigods and a satyr are being chased by a pair of Cyclops. In a fight, one is killed, Thalia, and she turns into a tree that showers a magical barrier throughout the forest, keeping the other three safe.
7 years later at Camp Half Blood, Percy Jackson (Logan Lerman) competes on an obstacle tower challenge, facing off the new star and bully of the Camp, Clarisse La Rue (Leven Rambin). Percy reaches the prize, only to give it up for the sake of helping a stranded demigod, leaving Clarisse to take the prize instead. Percy is then talked to by Mr. D (Stanley Tucci), the god of wine and also one of the Camp's director, he leaves Percy to clean off the mess the game left. After, Percy tries to contact his father, Poseidon, with zero results.
Percy is summoned by Chiron and along with Grover (Brandon T. Jackson), a satyr and Annabeth Chase (Alexandra Daddario), daughter of Athena, it is revealed that Percy has a half brother who is a Cyclops, Tyson (Douglas Smith). During a lunch at the dining pavilion, everyone looks and mocks Percy's new "freaky" brother, especially Clarisse who is only stopped when they hear sudden rumbling throughout the Camp. They discover that the Camp's magical barrier is failing. A giant mechanical bull who breathes fire breaks the barrier and attacks the whole camp, leaving several injuries and wreckage. Clarisse, Annabeth, Grover, Tyson and Percy all take rounds to defeat the monster but only Percy manages to defeat it.
Luke Castellan (Jake Abel), the Camp's traitor, arrives through a magical teleportation device and reveals to Percy that he poisoned the tree and let the bull through. Percy and the whole camp arrives at the entrance to the Camp and finds Thalia's tree dying, weakening the Camp's magical borders.
Percy consults Chiron about a prophecy he heard from Luke. Reluctantly, Chiron lets Percy go into the attic of the Big House to seek the Oracle. The Oracle tells Percy about the foreboding rise of the TItan lord Kronos and that a half-blood child of an eldest god, when turned 20, will decide the fate of Olympus, to save it or destroy it. Percy is confused about the prophecy while Annabeth and Grover discovers a possible cure for the tree, the Golden Fleece. Annabeth and Grover consulted Mr. D who completely disagrees. Later, at Camp assembly, Mr. D proposed the Golden Fleece, taking the idea as his own, leaving Annabeth furious. Mr. D picks Clarisse and Ichneutae, a satyr, to lead the quest.
Percy, hearing from the Oracle that he and Luke will grapple for the Fleece, decides to go out on an unpermitted quest. He tags Annabeth and Grover with Tyson catching up to them. They successfully got out of the Camp's border patrol.
Annabeth calls for the Chariot of Damnation, an ancient transport in the form a taxi cab, being driven by The Gray Sisters. On the way, The Gray Sisters tells that they know about Percy's prophecy but won't tell anymore. Percy grabs their one eye and attempts to throw it off the speeding taxi if they won't talk. They reveal the numbers, 30, 31, 75, 12, leaving Percy much more perplexed. The quartet arrives at Washington, D.C. On their way out of a coffee shop, Grover is kidnapped by Luke's henchmen, one of them is Chris Rodriguez (Grey Damon) who is a former camper like Luke.
Annabeth takes Percy and Tyson to a UPS Store that is actually Olympus Parcel Service that is being managed by Hermes (Nathan Fillion), Luke's father. He urges them to take Luke back on their side as he believes that you can't give up on your family. With the help of his annoying snakes, Hermes tells the gang that Luke is on a yacht called Andromeda that is sailing the Chesapeake Bay. Hermes gives them essentials: a wind thermos and a magical tape.
Percy tries to contact his father in hopes of helping them cross the water into Luke's boat, to no avail. When Tyson tried it, a hippocampus (half horse and half fish) emerges from the sea and takes them to the yacht. At the boat, they see former campers circling a big artifact that is covered by a sheet. When a monster tracks them, the trio attempts to escape, only to be cornered by a Manticore. Luke reveals that he is resurrecting Kronos and he'll use them as pawns to have the Fleece for himself. The trio are locked in the yacht's brig but with the help of Percy's water powers and the magical tape, they managed to evade. A chase ensues. Annabeth and Tyson gets to a lifeboat while Percy battles Luke's minions. The three of them escapes with the wind thermos propelling their lifeboat.
At the middle of the sea, Annabeth's dislike for Tyson is revealed to be rooting from the night Thalia died. When they arrived at the Sea of Monsters, they are swallowed by the Charybdis, a massive mouth in the sea. They are washed away into the monster's stomach and there, they found Clarisse and her dead crew on their ship. Clarisse hesitantly takes them. Percy forms a plan to escape the monster's stomach, Clarisse agrees but keeps on mouthing that it is her quest. Percy blasts a hole on the monster's stomach through Clarisse's weapons. Clarisse navigates the ship out of the gut to the surface.
With the numbers the Gray Sisters gave (that are actually coordinates), they arrived at the ruins of Circeland, an amusement park that is ruined by Polyphemus, the guardian of the Fleece, on its opening day. Percy, Annabeth, Tyson and Clarisse gets into the Plummet of Death ride that penetrates deeper in a cave. They arrived at Polyphemus's lair and finds Grover masquerading as a female Cyclops. When they are about to grab the Fleece silently from Polyphemus, he finds out about them and a chase befalls but in the end they managed to trap Polyphemus on his own cave with the Fleece on their hands.
At their way out, they are ambushed by Luke and his henchman who lets Tyson fall off the cave and into the water when he shot him with an arrow, leaving Percy devastated. They are then taken into a clearing near a roller coaster ride where they are tied up. Luke lays the Golden Fleece down on Kronos's sarcophagus. Percy uncaps his sword and helped Grover out first. Percy and his gang attacks. Percy and Luke takes on a deadly fight but an unharmed Tyson intervenes and throws Luke out.
Kronos rises. He picks up Luke and devours him. He wreaks havoc on the amusement park, stomping on some demigods and eating Grover too. Percy slashes Kronos on the ankle, a part of the Titan flies back to the coffin, Percy thinks that his sword is the cursed blade that will decide Olympus's fate. He proceeds on slashing Kronos, eventually arriving at the giant's arms. Percy takes a final swipe on Kronos's chest, taking the evil Titan back on his place. Grover and Luke are spitted out of the Titan's body. Grover lands on the clearing while Luke is thrown by a distance and into the hungry Polyphemus's lair.
Luke's henchmen flees. When they thought they are safe, the Manticore attacks and stabs Annabeth on the back. Clarisse and Grover proceeds on destroying the creature. Annabeth is fatally wounded and dies but Percy wraps the Fleece around her, giving her life back. Percy then hands the Fleece to Clarisse as it is her quest and she should be the one to deliver it.
Back at Camp, Clarisse puts the Fleece down the poisoned tree, restoring it's life back and so, the magical borders, leaving the whole Camp in celebration but Chiron warns Percy that prophecies has double meanings and he hasn't reached 20 yet so the prophecy isn't talking about the battle at Circeland. While keeping on their daily demigod routine, the silence of the Camp is broken when Grover alerted them about a happening on the entrance of the Camp.
They arrived at the Camp's entrance and sees Thalia, healed and alive, leaving Percy to wonder if she's the demigod that will decide the fate of Olympus.