A series of volcanoes erupt in Japan. The eruption at Mt. Futago (in Shizuoka Prefecture) attracts Gamera, whose arrival is witnessed by a young boy named Eiichi. Gamera then climbs up and into the volcano. A research team is dispatched to the volcano to find Gamera and study the effects of the eruption. Meanwhile, Chuo Expressway Corporation is building a roadway nearby, but local villagers refuse to leave.
The research team's helicopter is destroyed by a sonic beam emitted from a cave in the mountains. Reporters are informed that no bodies were found, the culprit is not Gamera or the volcanic eruption, and an announcement will be made soon. One of the reporters, Okabe, leaves for the site, and he and the roadcrew foreman, Shiro Tsutsumi, arrive at a protest area simultaneously. Okabe sneaks through the barrier, and Tsutsumi and his crew are turned away, as are the villager protesters, by the arrival of a young woman.
The villagers return to inform the village headman of the happenings. The protests are a ploy to get more money for the land. The young woman is revealed to be Eiichi's older sister.
The workmen enter the cave from a different opening and Eiichi makes his own way out of the cave, where he discovers Gyaos and is trapped by a falling rock. Gyaos grabs Eiichi and Gamera appears. Shiro and his crew arrive just in time to see a battle between Gamera and Gyaos, during the course of which Gyaos drops Eiichi, who is rescued by Gamera. Gyaos injures Gamera with its supersonic beam, but is forced to retreat after several blasts from Gamera's fire breath. Gamera rescues Eiichi and brings him safely to a nearby amusement park. Shiro uses the Ferris wheel to retrieve Eiichi from Gamera's back and Gamera flies away.
Gyaos wreaks havoc in the city, and the people gather at the Chunichi Dragons stadium, where the lights have all been turned on. Gamera shows up and they battle in the skies over Nagoya. Gamera gains the upper hand because Gyaos' beams cannot penetrate Gamera's shell. Gyaos then extinguishes Gamera's flame jets with a yellow vapor. When Gamera hits the water, he bites Gyaos' foot and tries to hold him there until sunrise. Gyaos then severs his own toe and flies away. The toe is found washed up on the beach by some workers and is eventually brought to Dr. Aoki, where it is remarked that it has shrunk considerably since its discovery.
The Defense Force constructs another platform on top of the existing one, with a giant bowl of artificial blood on it. With the help of Tsutsumi and his crew, they also build a viewing shelter. A delegation of villagers then appear and tell Tsutsumi they will no longer oppose the expressway. The headman appears and there seems to be some disagreement between the two sides. Gyaos is lured out, but the plan ultimately fails when the substation powering the motors explodes. Gyaos then destroys the hotel, extinguishes the substation fire with his vapor and flies away.
Tsutsumi and his crew use their construction equipment to prepare the area for the fire and an airstrike starts it. Gyaos appears and puts out the fire. The second time the fire is started, it attracts Gamera. A fierce battle ensues, which ends when Gamera immobilizes Gyaos and flies him to Mt. Fuji, where he then drags Gyaos into the crater and flies away.
Gamera vs. Gyaos was released theatrically in Japan on March 15, 1967. The film was never released theatrically in the United States, and was released directly to television by American International Television in 1967 as Return of the Giant Monsters. It was released to home video and reissued to television as Gamera vs. Gaos in 1987.
The film appeared twice on Mystery Science Theater 3000. Its first appearance was in 1988, when MST3K was still a local program airing on KTMA. Its second appearance was in 1991, after it became a nationally-aired program.