Created at the height of the G.I. Joe craze in the 1980s, G.I. Joe: The Movie was intended as a theatrical release to be closely followed by The Transformers: The Movie. However, the G.I. Joe film encountered unexpected production delays which allowed the Transformers feature to be released first. Due to the poor box office performances of The Transformers: The Movie and My Little Pony: The Movie, G.I. Joe: The Movie was instead released direct-to-video as well as aired on television in syndication, first in feature length format and later split into a five-part miniseries format as part of the show's syndication package.
While Cobra Commander and Serpentor blame each other's leadership of Cobra as the root cause of the organization's failures, Pythona, a woman from the secret civilization of Cobra-La, infiltrates the Terror Drome. While there, she reveals to Serpentor that Cobra-La was responsible for planting the idea in Doctor Mindbender's mind to create Serpentor. At her urging, Serpentor plans to capture G.I. Joe's latest weapon—the Broadcast Energy Transmitter (B.E.T.).
Cobra assaults the Joes as they test the B.E.T. in the Himalayas. The Joes use the B.E.T. to activate their automated weapons systems. Serpentor is captured and Cobra Commander orders a retreat. Cobra Commander leads his troops into Cobra-La.
As the Joes celebrate their victory, a new group of rookie Joes are brought onto the team, including the unlucky kunoichi Jinx, military police officer Law and his dog Order, former basketball player Big Lob, EOD specialist Tunnel Rat, covert operative Chuckles, and Duke's reckless half-brother, the green beret Lt. Falcon.
In Cobra-La, the Joe forces are ambushed and detained within the Lovecraftian living environment. The Cobra soldiers are met by the civilization's ruler, Golobulus, who has Pythona and his other henchman, Nemesis Enforcer, arrest Cobra Commander. While there, Cobra learns about their history: 40,000 years ago, Cobra-La was an ancient civilization that ruled Earth. However, the Ice Age, the evolution of humans and their development of scientific technology resulted in Cobra-La's survivors being forced into caverns within the Himalayas. Cobra-La rebuilt their society in secret as centuries passed. Golobulus vowed to destroy humanity so that his people could re-claim the earth. He eventually discovered a nobleman who was working on biological weapons. The nobleman later became Cobra Commander, charged with conquering the world for Cobra-La. However, Cobra Commander's repeated failures caused Golobulus to use a Psychic Motivator on Mindbender to create Serpentor.
Meanwhile, Falcon takes his girlfriend to G. I. Joe headquarters. His girlfriend is really Zarana in disguise, and her visit was a ruse to infiltrate Serpentor's holding cell. For abandoning his training, Duke puts Falcon on guard duty until he says otherwise. After Falcon abandons his post to flirt with Jinx, the Dreadnoks and the Nemesis Enforcer free Serpentor, injuring Alpine, Bazooka, and Gung-Ho in the process. General Hawk is furious with Falcon for abandoning his post and confines him to his quarters until court-martial.
In Cobra-La, Cobra Commander is tried for his repeated failures, and Golobulus reveals his plans to launch spore pods, filled with mutative spores into space and use the B.E.T. to hatch them. The spores will cause mankind to devolve into mindless beasts, allowing Cobra-La to reclaim the earth. Golobulus punishes Cobra Commander by exposing him to the spores, which transforms Cobra Commander into a snake. He flees and makes his way to the Joes' camp with Roadblock.
Convinced by Duke to spare Falcon a harsh punishment, General Hawk reassigns Falcon to the "Slaughter House" where he is to be retrained by Sgt. Slaughter and his "Renegades" consisting of ex-Viper Mercer, former football player Red Dog, and former acrobat Taurus. On a weaponless recon mission in the Terror Drome, the five learn of Cobra's plans and that the Baroness has discovered the location of the B.E.T. As Falcon and the others destroy the Terror Drome, Cobra launches an assault on the Joes. The Joes launch a counterattack on Cobra, but the B.E.T. is stolen. Serpentor attempts to kill Falcon with one of his snake spears, but Duke jumps in front of Falcon at the last minute. The spear hits Duke, knocking him into a coma.
Falcon, the Renegades and the new recruits head to the Himalayas to stop Cobra-La. The other Joes are led to Cobra-La's lair by Cobra Commander. The new recruits prove themselves valuable soldiers as the Joes rescue their captured teammates. Falcon, Jinx and Sgt. Slaughter confront Golobulus, Pythona, and Serpentor. The ensuing fight culminates in Jinx and Slaughter sending Pythona and the Nemesis Enforcer falling to their apparent demise. Finally, Falcon sends Serpentor out of Cobra-La and reconfigures the B.E.T. to incinerate the spore pods in space. The B.E.T. overloads, destroying Cobra-La as Golobulus escapes. Immediately following the battle, the strike team receives news that Duke has come out of his coma and is recovering.
The writers did not originally intend for "Cobra-La" to be the name of the rival civilization; this was merely a placeholder name in the drafts until a more alien label came to mind, but Hasbro executives fell in love with the name and forced the writers to keep it.
In the film's original script, Duke dies in battle after receiving a wound from a snake spear hurled by Serpentor. After this was written into the script, it inspired the death of the Autobot leader Optimus Prime in The Transformers: The Movie while both films were in production. However, Optimus Prime's death sparked a severe backlash among both fans and parents, and Hasbro reversed their decision on allowing Duke's death. While the scene was kept, replacement dialogue was inserted stating that Duke had gone into a coma. At the end of the film it is stated that he had come out of the coma. Writer and story editor Buzz Dixon said in an interview with JoeHeadquarters.com, "[If] you watch the visuals and don't listen to the soundtrack, it's obvious Duke dies." In the original script, the Joes also held his funeral prior to the final battle.
Rhino Entertainment first released the film on DVD on June 20, 2000. Shout! Factory released a remastered special edition on DVD and Blu-ray on July 27, 2010, featuring audio commentary from story consultant (and series writer) Buzz Dixon, and a printable copy of the original screenplay.