Feigning remorse for his past, Joker convinces Wolper to take him on a talk show to tell his story; he makes plans for his escape with an old henchman, who supplies him with mind-controlling lipstick. Meanwhile, Superman, who works as a government operative in exchange for being allowed to covertly help people, is asked by the President to end Batman's vigilante activities. Framing these events is a growing hostility between the USA and the Soviet Union over possession of the island of Corto Maltese. As Batman's continued presence humiliates the national authorities, Yindel becomes commissioner and orders Batman's arrest, and Superman warns Batman that the government will not tolerate him much longer.
Joker makes his talk show appearance on David Endochrine's show as Batman fights with the GCPD on the studio roof; while they fight, Joker kills Wolper, gasses everyone in the studio to death and escapes. He finds Selina Kyle and uses one of her escorts and his lipstick to take control of a congressional representative, who calls for a nuclear strike on the Soviets before falling to his death. Batman's investigation leads him to Selina, whom he finds bound and dressed like Wonder Woman. Kelley notices cotton candy on the floor, and Batman deduces that Joker is at the fairgrounds. There Kelley accidentally kills Joker's henchman while Batman pursues the Joker, who indiscriminately guns down dozens of people. As Batman corners a wounded and partially blinded Joker, he admits to feeling responsible for every murder Joker has committed and intends to stop him permanently. In the ensuing fight, Joker stabs Batman repeatedly, and Batman breaks Joker's neck in front of witnesses.
Content that he made Batman lose control and that he will be branded a murderer, the Joker finishes twisting his neck, killing himself. The GCPD arrive and Batman, bleeding profusely, fights his way to Kelley and escapes. After Superman deflects a Soviet nuclear missile, he is hit with the blast and badly injured; the detonation creates an electromagnetic pulse that wipes out all electrical equipment in the United States and causes a nuclear winter. As the city descends into chaos, Batman, Kelley and Gordon rally the Sons of Batman and the citizens of Gotham to restore order, and Yindel accepts that Batman has become too powerful to take down. While the rest of the powerless U.S. is overrun with crime, Gotham becomes the safest city in America, embarrassing the President's administration and prompting them to send Superman to finally stop Batman. Batman and Superman agree to meet in Crime Alley.
Wearing a powerful exoframe and supported by Kelley and former superhero Oliver Queen (Green Arrow), Batman fights Superman, using various tactics to make the fight even. When Superman gains the advantage, Queen hits him with an arrow made that releases Kryptonite dust in his face. Superman inhales the dust, which works its way through his system. His powers gone, Batman defeats Superman, and claims that he intentionally made the Kryptonite weak, to defeat Superman without killing him. Batman then apparently dies of a heart attack, while Wayne Manor self-destructs, and Alfred dies of a stroke. In the aftermath, the world learns that Bruce was Batman; all of his secrets are destroyed with the manor and his finances disappear. As Superman leaves Wayne's funeral, he gives Kelley a knowing wink after hearing a faint heartbeat coming from Bruce's coffin. In underground caves, Bruce is revealed to have faked his death and makes preparations to continue his mission more discreetly, allied with Kelley, Queen, and his followers.