During Christmas 1955, a young Hellboy is told a bedtime story by his adoptive father, Trevor Bruttenholm, of an ancient war between human and magical creatures. After the magical creatures are driven back by the humans, the goblin blacksmiths extend an offer to Balor, king of the elves, to build him an indestructible mechanical army. Encouraged by his son Prince Nuada, Balor accepts; the Golden Army subsequently devastates humanity. Regretting his actions, Balor forms a truce with the humans, that they will keep to the cities and the magical creatures to the forests. The crown to command the Golden Army, which can only be worn by one of royal blood, is split into three pieces. Nuada, disagreeing with the truce, leaves in exile.
In the present, Nuada returns and begins gathering the pieces of the crown. He collects the first piece from an auction, unleashing tooth fairies, voracious flying creatures that eat the crowd alive, and kills his father for the second piece. His twin sister, Princess Nuala, escapes with the final piece. Meanwhile, at the B.P.R.D., Hellboy is having issues with his girlfriend Liz, and dislikes that their organization must operate in secrecy. Investigating the auction slaughter, Hellboy allows himself to be revealed to the world. In the commotion, Abe Sapien discovers Liz is pregnant; she swears him to secrecy. Furious at Hellboy's actions, the Bureau's superiors send the ectoplasmic medium Johann Krauss to rein him in. With Krauss in charge, the team tracks the tooth fairies to a secret market under the Brooklyn Bridge. Abe finds Nuala, who has obtained a map leading to the Golden Army, and falls in love with her. Hellboy fights and kills Nuada's accomplice Wink and an elemental forest god that Nuada summons against him. During the fight Nuada questions why he fights for the humans when they have driven the magical creatures into hiding, of which he too is one. Nuala is taken under the B.P.R.D.'s protection.
Nuada tracks his sister to the B.P.R.D. headquarters using their magical bond, which causes them to share wounds and read each other's thoughts. Nuala hides the final crown piece before Nuada finds her, and he battles Hellboy. Nuada critically wounds Hellboy with his spear and abducts Nuala, promising her return in exchange for the crown piece. Unable to remove the spear shard in his wound, Liz and Abe decide to take Hellboy to the Golden Army's location in the Giants Causeway in Northern Ireland. Krauss comes along, as he sympathizes with Liz, revealing that he too lost his wife in the accident that caused the loss of his own body. They encounter the Bethmoora goblin master blacksmith who brings them before the Angel of Death to retrieve the spear shard. Though warned Hellboy will doom humanity if he lives and that she will suffer the most from it, Liz pleads for Hellboy's life. The Angel removes the shard from Hellboy's chest and tells Liz to give him a reason to live. She reveals to Hellboy that he will be a father, and he recovers.
