A submarine is destroyed near the North Pole by a mysterious undersea light. The loss of this and several other ships in the Arctic alarms the world. Governments temporarily close the polar route and convene an emergency meeting at The Pentagon. Present is Commander Dan Wendover (Dick Foran), the captain of the atomic submarine Tigershark, and Nobel Prize winning scientist Sir Ian Hunt (Tom Conway). The United States Secretary of Defense (Jack Mulhall) leads the meeting; he explains all that is known about the Arctic disasters and then describes the high-tech capabilities of Tigershark. These include a special hull and a mini-sub (Lungfish) that can be stored inside the submarine. The Secretary finishes by telling Wendover that he is to take Hunt, Tigershark, and her crew to resolve the ship sinkings and, if possible, eliminate their cause.
Lieutenant Commander Richard "Reef" Holloway (Arthur Franz), Tigershark's Executive Officer, learns that his bunk mate is to be Dr. Carl Neilson Jr. (Brett Halsey), a pacifistic scientist he dislikes. A montage then follows, spotlighting the day-to-day life aboard Tigershark, which eventually discovers the cause of the disasters: an underwater saucer-shaped craft with a strange sole light atop and in the center of the saucer's upper dome. One of Tigershark's scientists, Dr. Clifford Kent (Victor Varconi), briefly shows a photo of an Unidentified Flying Object, pointing out its similarity to this underwater UFO. The submariners began to realize their quarry is an extraterrestrial lifeform. The crew nickname the saucer "Cyclops" because of its sole light.
Commander Wendover orders the submarine's most powerful torpedoes fired. They reach the saucer but do not explode, being stopped by a gel-like extrusion coming from within the UFO. The captain orders Tigershark to ram the alien saucer. The submarine's bow tip breaks through its lower side and becomes trapped.
Dr. Neilson pilots Lungfish, taking Lt. Commander Holloway and a small party to board the UFO. While Dr. Neilson waits on the mini-sub, Holloway has the boarding party cut free the bow with blow-torches. Meanwhile, he explores the saucer's dark hallways and receives his first telepathic message from its sole occupant, an octopus-like creature with a single large eye for a head. The alien proves its hostile intent by remotely killing all the boarding party except Holloway. The creature announces that it plans on bringing several human specimens back to its home planet for further study. The aliens' plan is to modify themselves, based on what they learn about humans, and once finished, they will come back and take over the Earth.
Holloway attacks the alien by firing a Very pistol into its single eye, temporarily blinding it. He then races back to Lungfish and returns to the Tigershark with Dr. Neilson. When Dr. Neilson asks about the remainder of their boarding party, Holloway says, "Fortunes of war".
Despite the large hole in its underside, the flying saucer sails to the North Pole to recharge its energy in preparation for takeoff. Holloway tells Wendover, "Captain, if that thing ever gets back to where it came from, the Earth and everyone on it is doomed".
The submariners hold an emergency meeting of Tigershark's on-board scientists, and they develop a plan to adapt a torpedo's guidance system to an ICBM, converting it into an improvised ground-to-air missile. When the saucer rises from the ocean, Tigershark fires the missile, destroying the UFO. Holloway and the young Neilson are reconciled, with the latter realizing that his pacifism was no match for a hostile alien.
A stock footage opening prologue describes how explorer Robert Peary had trouble reaching the North Pole in 1909 and speculates on how Peary would have been amazed to see in just a few decades later how this Arctic region had become a major thoroughfare for civilian and military shipping; a futuristic prediction of cargo-carrying atomic submarines follows.
Principal photography for The Atomic Submarine took place from mid-June to early July 1959. Stock footage of submarines and ship explosions were interspersed with other shots.
Producer Alex Gordon wanted to hire veteran actors Frank Lackteen and Edmund Cobb to play passers-by. The studio objected to the $100 salary for each, contending that they were functioning as extras and were only entitled to $20. Wanting these old-timers to get a day's pay, Gordon paid them out of his own pocket. The Atomic Submarine was the last feature film for actors Victor Varconi and Jack Mulhall.
Film historian Paul Meehan considered The Atomic Submarine as "something of a departure from the usual saucer movie formula". Reviewer David Blakeslee, in a later assessment, commented that "once you get past the wooden acting, creaky scripts, stilted narration, corny humor, low-budget props and sheer implausibility of The Atomic Submarine's story line, you'll find themes and ideas worth pondering a bit longer than it takes to laugh away at the non-stop unraveling of sci-fi B-movie conventions". Chief among the unusual elements is "a headier-than-expected socio-political debate between a young principled pacifist and the career military man and WWII veteran sub captain over the merits of war and peace".
Two later science fiction films also "starred" nuclear submarines: the USOS Seaview in Irwin Allen's Voyage to the Bottom of the Sea in 1961 and the submarine Atragon in the Japanese film Atragon in 1963. In all three films a high-tech nuclear submarine of the near-future travels to the deepest part of the ocean in order to save the Earth from destruction.
Actor Arthur Franz, who played Lieutenant Commander Holloway in The Atomic Submarine, guest starred five years later on an episode of Irwin Allen's 1964 submarine TV series Voyage to the Bottom of the Sea.