The film begins with a ship slowly moving through mist and a pan shot down the vessel reveals an odd collection of people – Spanish conquistadores, priests, pirates, seamen and finally to the captain of ship who is reading the burial rites over a coffin. The coffin is subsequently ditched overboard and the captain asks "What happened to us? How did we all get here...?" The film then cuts back in time to previous events.
On the bridge of the tramp steamer Corita, Captain Lansen (Eric Porter) orders his crew to avoid the repeated requests of a customs launch from the port of Freetown to stop for inspection. The captain orders the ship full steam ahead and to avoid the usual shipping lanes on its way to Caracas.
The passengers on board all have various reasons for leaving Freetown – amongst them a Dr Webster (Nigel Stock) and his daughter Unity (Suzanna Leigh) for his indiscretions with patients, an alcoholic conman Harry Tyler (Tony Beckley), and Ms Eva Peters (Hildegard Knef) who has stolen bearer bonds to pay for the ransom on her son in Caracas, but who has a lawyer, Ricaldi (Ben Carruthers), after her to retrieve them.
In the ship's hold the crew comes across a large cache of unknown yellow containers. The captain tells the crew to not ask what is inside the containers but that they must be kept dry and handled securely. The captain is also informed of a storm ahead but ploughs on regardless knowing that the passengers do not want to return to the African port.
Captain Lansen informs his First Officer Hemmings (Neil McCullum) that they are transporting a dangerous explosive – Phosphor B ('Phosphore Blanc', i.e. white phosphorus) – and he demonstrates in a sink what happens if it comes into contact with water - it explodes violently.
When some crew members are ordered to take some slack out of the anchor chain, the anchor windlass breaks and sends the anchor crashing down the side of the ship, holing the hull right where the explosives are stored. When the emergency pumps are started to try and pump out the store room, the generator breaks down and all power is lost.
The crew convince the First Officer that it’s too dangerous on board and that they need to abandon ship. Overpowering Captain Lansen and clubbing the ship's Indian chef (Shivendra Sinha) unconscious, they take to a lifeboat. The passengers and engine room crew decide to remain on board as the call to abandon ship hasn’t been made by the captain. While they attempt to lower the lifeboat, Lansen opens fire on the mutineers and the lifeboat crashes into the sea. The boat survives and the crew row away.
Lansen informs the passengers about the cargo and they help him move it from the flooding storage room. However, the Chief Engineer, Nick (James Cossins), tells Lansen that he cannot fix the generator, so the captain decides to abandon ship and gets the remaining crew and passengers into a lifeboat.
The lifeboat survives the storm and the captain tries to maintain morale but argument breaks out about the supplies and too many people in the lifeboat. The alcoholic Tyler manages to drink a flagon of rum, and he and Dr Webster end up in the sea. While Tyler tries to rescue Webster, the doctor is devoured by a shark, and a subsequent fight in the lifeboat sees another crew member, who was trying to stab the captain, shot with a flare gun, by Eva Peters.
In the morning the lifeboat finds itself surrounded by odd-looking seaweed. Lansen picks a piece of it up and it immediately tightly wraps itself around his hand, drawing blood. Lansen just manages to pull it off. However, the injured cook goes delirious, tumbles overboard and is quickly enveloped up by the carnivorous seaweed. The lifeboat then bumps into a ship. It transpires to be the Corita, with the bartender (Jimmy Hanley) still aboard. They all get aboard, but find the propellers are fouled with the seaweed and they are left drifting with the currents. During the night, Unity Peters and the lawyer share cigarettes, kiss, and then she is attacked, but the lawyer saves her, by using a hatchet. Then he is dragged overboard by the huge octopus, because she faints, and can't rescue him in turn.
The next day, a girl called Sarah (Dana Gillespie) appears walking on the weed, using large shoes and lighter-than-air balloons attached to her shoulders. She tells the captain they will be attacked soon and shortly thereafter the ship is attacked by a number of Spanish soldiers/pirates. The crew and passengers fight them off and the surviving attackers return to a Spanish galleon. On board the galleon we find a child leader – "El Supremo" (Darryl Read) – the descendent of the Spanish Conquistadores, and members of the Spanish Inquisition who ordered the attack on the Corita in order to get stores. The failure of the attack sees the leader of the attackers thrown into a pit in the ship that contains a sea monster that devours him.
Sarah tells the captain about how her ancestors were trapped in the Sargasso Sea many years before and that they live on an island. They have been at war with the Spanish descendants for many years. Sarah then takes an opportunity to try and return to her island. The ship's chief and bartender, the conman go after her but get lost in the mist. Sarah finds them but they decide to stay on an island for the night and find the ship in the morning. While on the rock the bartender is attacked and killed by a giant hermit crab which itself is then attacked by a giant scorpion and killed after it is shot in the eye while the scorpion escapes. Sarah, the ship's chief, and the conman are then captured by the Spanish and taken to the galleon.
Lansen then appears on the galleon to rescue his people and tells the Spanish that they can join him rather than be under the control of the religious zealots. Even the child leader "El Supremo" wants to come along, but he is killed by the head of the Inquisition. The crew battles some of the galleon's crew and use the Phosphor B explosives to set alight the galleon and the seaweed.
The captain and his crew, along with those Spaniards who have decided to join Lansen, withdraw to the Corita. We then return to the start of the film with the burial of the child leader. The ship is seen moving through the mist – leaving the viewer to decide whether they are still trapped or sailing away from the "Lost Continent".Directed by Michael Carreras
Produced by Michael Carreras
Music by Gerard Schürmann and title song by The Peddlers
Special effects by Robert A Mattey
A 175,000 gallon tank was constructed at Elstree Studios to shoot the sea scenes. The credits list Michael Nash — a pseudonym for Michael Carreras — as the screenwriter.
The production began under the direction of Leslie Norman, but he was soon replaced by Carreras. Hammer's musical director Philip Martell rejected the original film score by Benjamin Frankel and commissioned a new one from Gerald Schumann.
This film was one of several Hammer movies that featured unusual characters and prehistoric creatures, following the tradition of One Million Years B.C.. It was rated X when first released.
The film titles has the song Lost Continent performed by The Peddlers played over them.