King Kong, after being shot down from the World Trade Center, is kept alive in a coma for about 10 years at the Atlanta Institute, under the care of surgeon Dr. Amy Franklin (Linda Hamilton). In order to save Kong's life, Dr. Franklin must perform a heart transplant and give Kong a computer-monitored artificial heart. However, he lost so much blood that a transfusion is badly needed, and to complicate matters, Franklin says there is no species of ape or other animal whose blood type matches Kong's. Enter adventurer, and eventual love interest, Hank "Mitch" Mitchell (Brian Kerwin), who goes to Borneo (Mitchell theorizes that Borneo and the island from the first movie were once part of the same landmass) and captures a giant female gorilla who is dubbed "Lady Kong." Mitchell brings her to the Institute so her blood can be used for King Kong's operation. The transfusion and the heart transplant are a success, but Kong escapes along with Lady Kong.
Archie Nevitt (John Ashton), an insane army lieutenant colonel, is called in with his men to hunt down and kill the two apes. Lady Kong is captured alive by Nevitt's troops and imprisoned; Kong falls from a cliff and is presumed dead.
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King Kong Lives was panned by critics. Rotten Tomatoes rated a 0% based on 9 reviews. Roger Ebert gave the film only one out of four stars and stated, "The problem with everyone in King Kong Lives is that they're in a boring movie, and they know they're in a boring movie, and they just can't stir themselves to make an effort."
DEG sent a notice to Ebert and Gene Siskel notifying the two critics that they were allowed to show snippets of the film on TV in their native Chicago, but were forbidden to show the same snippets on the national scale. Siskel remarked "Obviously, they were scared [...] If you don't believe me or Roger, believe the film company, that, think about it, couldn't find a single scene that it wanted you to see."
Despite its marketing campaign, King Kong Lives was a box office flop, grossing $4.7 million during its theatrical run. The film was nominated for one Razzie Award, Worst Visual Effects. Actor Peter Goetz received a residual check of 12 cents from the film and decided to frame it as a tribute, never cashing it.
The film is listed in Golden Raspberry Award founder John Wilson's book The Official Razzie Movie Guide as one of The 100 Most Enjoyably Bad Movies Ever Made.
King Kong Lives was released on VHS as King Kong 2. The film was later released on DVD with its original title.
Two official video games based on the movie were developed and released only in Japan by Konami and titled King Kong 2: Ikari no Megaton Punch for the Famicom, and King Kong 2: Yomigaeru Densetsu for the MSX. The Famicom game totally discarded the human aspect of the story and players played as King Kong who has to travel around the globe fighting giant robots and certain military forces in order to save the female Kong. The game was designed as an action adventure game with some science fiction concepts. The MSX version, on the other hand, plays from the perspective of Mitchell. This version is a role-playing game.