St. John and Mike are sitting in a bar playing cards. St. John is burnt out on working for the Company and wants to quit. Jo is at the hangar, and Jason, in his Company office, when all of their TVs' programming is interrupted by an eccentric named Malduke. He orders all nations to deport diseased persons to remote colonies, and shows a freighter with dead crew members on board as a warning.
An American jet fighter is sent to sweep the area where the freighter is, but is destroyed by a laser, controlled by Malduke from a device in orbit. From a lab hidden inside a tomb, Malduke watches as Airwolf approaches the freighter. Activating again, the laser tries to strike Airwolf. Mike tries to find the frequency of the laser to disable it, but fails. He and St. John determine that the laser is tracking them by sound, so they go to whisper mode, which disables the laser. Malduke warns them as they fly closer to the freighter, saying he'll detonate explosives, which will release toxic waste into the ocean.
St. John and Mike hold off on the freighter, but Jason and Jo back at the lair, alert them to Airwolf's altimeter being tracked by Malduke's satellite, preventing them from returning. After a few minutes, the satellite's orbit takes it out of tracking range, allowing St. John to return Airwolf to the lair. Jason confirms that the freighter indeed carries waste, and many countries pretend to abide by Malduke's orders to deport diseased citizens to buy time to develop a plan.
Three country leaders have been killed for not carrying out Malduke's orders, and the crew picks up another broadcast of Malduke reiterating his plan. Jo traces it to San Francisco and Mike and St. John go there in Airwolf. As they approach, Mike realizes too late that it's a trap, and the rigged shed containing the tape recording explodes, damaging Airwolf and disabling the weapons. Malduke sends three Hueys to shoot Airwolf down. Mike scrambles to rig Airwolf's wiring to get the weapons to deploy. Once it's done, St. John makes quick work of all three Hueys.
Malduke is impressed, but warns that if he sees Airwolf in the sky again, he'll detonate the explosives on the freighter. The National Security Council wants an attempt to be made to disarm the explosives, and the crew gets the assignment. They are to go to the freighter with clouded weather covering them, and they have until it clears to disarm the devices, otherwise, the cleared sky will allow Malduke to pick them up on his satellite.
From his hideout, Malduke orders to find the location of Airwolf's lair, but doing so isn't possible with the current cloud cover. At the lair, Jason and Jo have a heartfelt send off for St. John and Mike. St. John claims to want to discuss his retirement upon his return. They leave the lair and head for the freighter. Malduke calls the lair asking for St. John, and Jason tries to cover for him, but Malduke wants him to a radio within 20 minutes.
St. John and Mike arrive to the freighter and go into whisper mode to avoid the laser. St. John is lowered to the ship and begins looking. At the lair, Malduke gives his 5-minute warning to hear from St. John. St. John finds the triggering device and has Mike patch him in to Airwolf's computer containing information that Jason gave them earlier about disarming it. Jason tries to stall Malduke, which allows Malduke to trace the call and locate the lair. Realizing what's happening, he has the freighter detonated. At the same time, St. John cuts the wire, and the charge sends him flying. With the freighter safe, he's hoisted back into the Lady. Once back inside, St. John's fed up with the danger, and swears he's quitting the Company.
With the freighter still intact on satellite, Malduke wants to take his team on a mission. That evening, they go to the lair and hold Jason and Jo hostage, but not before Jason flips a switch. With St. John and Mike now flying in the Valley of the Gods, they face certain danger, as Malduke had his men rig a network of lasers inside the neck of the mountain, resulting in an explosion that will bury them all if the plain is broken.
The hollow drone of Airwolf approaches, but never enters the lair. St. John and Mike enter on foot and try to confront Malduke with guns drawn. But with his gun trained on Jo and holding a trigger box connected to fuel drums, they're forced to drop their weapons. St. John throws his on the control panels, causing a flash of sparks. The distraction allows them to get Jo out of the way while they try and fight Malduke. His show of strength seems effortless as he picks St. John up by his neck and swats Mike over the railing. Firing bullets also proves fruitless. St. John pushes Malduke into the control panels, electrocuting his body until his head falls off, showing it to be a robot. The eyes in Malduke's robot head eerily look back and forth as it sits.
With everything under control, Mike admits that he knew something wasn't right about Malduke when they scanned the lair for heat sources and he blended in with the equipment. They also heard everything going on during their flight in, thanks to Jason's flipping the transmitter switch. Relieved, they all resume normal, feeling that they're free of Malduke. All the while, he's watching them from his tomb hideout.