Rocky has successfully defended his title 10 times since winning it from Apollo Creed, yet hasn't really been challenged. The film opens with a montage of Rocky defeating the title contenders, parallel to a strong fighter, Clubber Lang, destroying opponents in exhibition bouts.
Paulie is then seen walking into an arcade with a bottle of whiskey in his hand, clearly drunk. He sees a Rocky-themed pinball machine and throws his bottle at it, shattering the artwork. We then see Rocky bailing Paulie out of a cell. Rocky and Paulie are walking to the car when Paulie asks why he cares so much for Mick but not for Paulie. Rocky gives Paulie a job as part of his training team.
For charity, Rocky takes part in a "Boxer vs. Wrestler" match against a wrestler named Thunderlips. Rocky is tossed around like a rag doll for most of the match, then eventually takes off his gloves and sticks it to Thunderlips. He lifts him above his head and throws him into the crowd. After the match, Thunderlips agrees to have a polaroid taken with the Balboa family. Throughout the match, Mick appears to be in pain and is struggling to stay stood up outside the ring.
After a string of successful title defenses, a statue of Rocky is being erected at the top of the steps of the Philadelphia Museum of Art. Rocky takes this opportunity to announce his retirement, but is interrupted by Clubber Lang who suggests that Rocky isn't man enough to give him a title shot. After making a suggestive comment towards Adrian, Rocky loses his cool and we then see him arrive at home being begged by Adrian not to fight him. Mick is packing his bags inside, claiming that Clubber Lang isn't like all the other title defenders, and that he'll crush Rocky. He's eventually talked into training Rocky for the fight. They train at a new gym which Mick isn't impressed with, and it doesn't seem that Rocky is getting the hard training that helped him win the title from Creed. Before the fight, commotion breaks out in the locker room between Rocky and Clubber, and Mick is accidently pushed into a rail. Mick is too hurt to go out, but demands that Rocky goes and defeats Lang. Rocky can't take his mind off his manager and loses the title to Clubber Lang by knock out in the second round.
Rocky goes back to the locker room and Mick is lay on a bench hardly able to talk. He tells Mick that the fight ended in a round 2 knock out, which is true, but he doesn't mention that it was Clubber who won the fight and not Rocky himself. After a conversation about the future, Mick dies of a severe heart attack and the scene closes with Rocky, Adrian and Paulie crying. A short funeral scene follows, and then a montage occurs showing Rocky visibly upset in which he angrily throws his helmet at his statue. Rocky ends up back in Mick's old gym when Apollo enters. Rocky is shocked to see Apollo, but Apollo convinces Rocky to let him train him for a rematch against Clubber.
Apollo takes Rocky, Adrian and Paulie to Los Angeles where Apollo learned to fight, and they're taken to a gym full of hard working young fighters. Rocky can't seem to get the "Eye of the Tiger" back and is constantly yelled at by Apollo. He reveals to Adrian on the beach that he's afraid of losing everything, that he didn't care what happened when he started out but now he has a family and a good life, he doesn't want to lose everything.
The traditional training montage follows, showing Rocky gradually improving and becoming the fighter that he needs to be in order to take the title back from Clubber.
Before the match, Apollo visits Rocky's dressing room and gives him the American flag shorts that Apollo wore in their first fight together. Rocky goes out and it seems that maybe the rematch won't be any different from the first bout, but as Clubber delivers more hard hits, Rocky just gets mad and gives as good as he gets. Eventually, Rocky knocks Clubber out and retains the title.
After the fight scene, we see Rocky and Apollo enter a private gym both dressed in boxing attire, where Apollo has a surprise for Rocky. The surprise is that Apollo wants one more bout with Rocky because of the close result that ended their second fight. The film ends with the still image of both men throwing a punch at each other.
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