Harry Baldwin (Ray Milland), his wife Ann (Jean Hagen), their son Rick (Frankie Avalon), and daughter Karen (Mary Mitchell) leave suburban Los Angeles on a camping trip. The Baldwins notice unusually bright light flashes coming from a great distance. Sporadic news reports broadcast on CONELRAD hint at the start of an atomic war, later confirmed when the Baldwins see a large mushroom cloud over what was Los Angeles.
The family initially attempts to return to rescue Ann's mother, who lives near Los Angeles, but soon abandons these plans as panicked refugees climb over one another to escape the fallout from multiple nuclear explosions. Witnessing the threads of society being torn apart, Harry decides the family must find refuge at their secluded vacation spot.
Along the way, they stop to buy supplies, or, in the case of hardware store owner Ed Johnson (Richard Garland), take them by force when he won't accept a check. They also encounter three threatening young hoodlums, Carl (Richard Bakalyan), Mickey (Rex Holman), and Andy (Neil Nephew), on the road, but manage to drive them off.
After a harrowing journey, the Baldwins reach their destination and find shelter in a cave, while they wait for order to be restored. On their portable radio they listen to war news and learn that what is left of the United Nations has declared this to be "Year Zero". They find that Johnson and his wife are their neighbors, but not for long. The three thugs appear and shoot them. A farming couple suffers the same fate, and their teenage daughter, Marilyn (Joan Freeman), is kept as a sex slave. Karen is also raped when Mickey and Andy happen upon her. With guns in hand, the Baldwin men fight back, killing the two murderers and freeing Marilyn. Marilyn returns with them back to camp. Some time later Rick is out with Marilyn chopping wood. Carl sneaks up behind Marilyn and forces her to drop the rifle she is holding, and begins to question her about what happened to his friends. Rick tells him to back off and throws a piece of wood at him while at the same time Marilyn breaks away and grabs the rifle and shoots Carl dead, but at the same time Carl fires a shot off hitting Rick in the leg.
With Marilyn's help, they look for a doctor she knows of in Paxton. On the drive there they hear that "the enemy" has asked for a truce and Year Zero is ending. They find Doctor Strong (Willis Bouchey, billed as Willis Buchet). The doctor does what he can, but the boy needs a blood transfusion and must be taken to an army hospital more than a 100 miles (160 km) away, or he will die. Along the way they encounter a military patrol scouting for the army that is reestablishing order. After a tense meeting, the group is allowed to continue. Watching them depart, the soldiers note that they're among the "good ones" who escaped radiation sickness by being in the mountains when the bombs exploded. As the family drives on, a closing title card states: "There must be no end – only a new beginning".
The film was originally known as Survival. Samuel Z. Arkoff of AIP said Avalon and Milland were teamed together because "they both have particular types of followers and the combination adds up to an attraction."
Roger Corman later said about the movie, "the subject was exciting, but the technicians who worked on the film, who were my technicians, told me that Ray had been somewhat overwhelmed. He wasn’t organized enough to act and direct at the same time. He lost time on a three-week scene and forgot his scenes."
Frankie Avalon later said, "the film came out to real good reviews. AIP was smart enough to send the star with the picture around the country to promote it. We did a tour of theaters in Los Angeles, and it made its money back just in Los Angeles alone."
This success led to Avalon making a number of movies with AIP.
Michael Atkinson, the film critic for The Village Voice, liked the film and wrote in 2005, "This forgotten, saber-toothed 1962 AIP cheapie might be the most expressive on-the-ground nightmare of the Cold War era, providing a template not only for countless social-breakdown genre flicks (most particularly, Michael Haneke's Time of the Wolf) but also for authentic crisis—shades of New Orleans haunt its DVD margins...the movie is nevertheless an anxious, detail-rich essay on moral collapse."
Glenn Erickson writes, in his DVD Savant review, "Panic In Year Zero! scrupulously avoids any scenes requiring more than minimalist production values yet still delivers on its promise, allowing audience imagination to expand upon the narrow scope of what's actually on the screen. It sure seemed shocking in 1962, and easily trumped other more pacifistic efforts. The Day the Earth Caught Fire was for budding flower people; Panic In Year Zero! could have been made as a sales booster for the gun industry."