A massive eruption in Noshiro, Japan reveals a huge cave in the mountainside. An American paleontologist named Roy Carlyle, along with his assistant Marge and a couple Japanese scientists, explore the cave in hopes of finding some fossils. They stumble upon a gigantic tyrannosaurus rex and ankylosaurus encased in lava. The two creatures appear to have been locked in combat before they were trapped in the magma. The scientists presume that the creatures are dead, and must have had there bodies preserved due to the volcanic gases in the cave. However, one of the Japanese scientists warns them not to disturb the "monsters of Noshiro" as danger will befall them according to a prophecy. His warning falls on deaf ears as the creatures are readied to be shipped off to San Francisco for further study.
Carlyle attends a conference in Tokyo were he states his hypothesis that the two creatures found in the mountainside are in fact two giant cousins of the extinct tyrannosaurus rex and ankylosaurus. He also goes on to say that these two creatures were mortal enemies and would often engage each other in combat whenever the opportunity arose.
Meanwhile, the gigantic tyrannosaurus rex and ankylosaurus are in mid transit to San Francisco when it is discovered that the creatures are in fact very much alive. The scientists aboard the ship are overjoyed as they feel that with this discovery they may have unlocked the secret to suspended animation. McBain, a sailor who is currently in the middle of relationship with Marge, does not share there excitement as he feels the creatures should be thrown overboard before the creatures might be able to cause untold horrors. As fate would have it, a violent storm strikes the boat and causes the restraints on the tyrannosaurus rex to break, sending the creature to rolling across the deck and straight off the ship.
Fortunately, the ankylosaurus does not meet the same fate and the boat arrives safely in the docks of San Francisco with their prize. McBain and Marge both leave the boat to go out on a date shortly after arriving. While they are away, the tyrannosaurus rex surfaces in the bay. The dinosaur's presence awakens the ankylosaurus, who quickly breaks out of his constraints and the two behemoths quickly engage each other. Their fight startles a nearby truck driver, who in turn crashes into a nearby oil refinery that creates a giant explosion. The creatures make their way to Chinatown where they battle amongst the oriental structures.
Carlyle is given news of the creatures fighting in San Francisco which causes him to suffer a stroke. McBain and Marge visit him in the hospital where Carlyle asks them to please destroy the creatures before they can do any more damage. Carlyle's doctor, however, feels that this is not a wise idea as in Carlyle's current state he could die of depression if he loses his chance of getting a Nobel Prize, which will indeed happen if both dinosaurs die.
Meanwhile, the tyrannosaurus rex kills the ankylosaurus by biting it in the jugular. The surviving dinosaur then heads to a nearby university, where Marge and other scientists happen to be working to try and recreate a formula for the volcanic gases found in the cave that they hope will put the creature back into suspended animation. McBain arrives to warn them that the tyrannosaurus rex is coming, but the scientists ignore him as they explain that they are very close to discovering the formula. McBain then punches Marge, knocking her out, and carries her out of the building right before the tyrannosaurus rex crushes the structure and kills the other scientists inside. The military then arrives and attacks the dinosaur with tanks and rockets, but neither have any affect on the creature as it returns out to sea.
The Navy chases after the creature with planes and submarines, yet neither is effective. McBain and Marge follow the creature aboard a naval destroyer until the Navy loses track of the creature. Shortly afterwards, they are able to relocate the beast who is now swimming toward a mysterious tropical island in the polar regions. A scientist figures out that the creature must indeed be female and is no doubt going there to lay its eggs. McBain considers that nuking the tyrannosaurus rex might be there best solution for destroying it before this happens. However, killing the creature will no doubt in danger Carlyle in his fragile state, so he comes up with another plan which he tells to the Navy. The Navy surrounds a nearby ice cavern with oil drums, where they know that the tyrannosaurus rex is hiding. All does not go to plan, as a Navy solider gets himself trapped beneath a oil drum just as the tyrannosaurus rex is approaching. McBain rushes out and saves the man while throwing a grenade at the oil drums which causes a chain reaction. The tyrannosaurus rex is trapped in the cavern as jets bomb the hill side causing it to collapse on the creature, burying it in ice. Scientists predict that the ice should put the tyrannosaurus rex back in suspended animation, which will allow Carlyle to study the creature whenever he pleases.
Meanwhile at Noshiro, a large claw reaches out of the cave opening...
The Volcano Monsters was originally going to be distributed in the United States by ABPT-Productions (owned by Harry Rybnick and Edward Barison). The film was going to be even less true to Raids Again than Gigantis, the Fire Monster. All scenes with Japanese actors were going to be cut along with everything Gigantis took out. Cuts included neither Godzilla nor Anguirus breathing any type of fire and the two monsters just being giant dinosaurs.
Toho still went ahead with the project as they wanted their films to be distributed in the United States in some way, and they sent the GyakushuGoji and ShodaiAngira suits for the Americans to able to produce new scenes for the film. However, The Volcano Monsters was never made because in July 1957, ABPT-Productions closed down and the suits were lost.
Eventually, the The Volcano Monsters project was replaced with Gigantis, the Fire Monster and the finished film ended up being distributed by Warner Bros.