Peter Parker is estranged from both his love interest Mary Jane Watson and his best friend Harry Osborn and discovers that his aunt May is facing eviction. He finds himself suffering temporary but recurring losses of his powers, often in life-threatening situations. Harry, who is now head of Oscorp’s genetic and scientific research division, is sponsoring a fusion power project by nuclear scientist Otto Octavius, who befriends and mentors Peter. While handling hazardous materials, Octavius wears a harness of powerful robotic tentacle arms with artificial intelligence. During a public demonstration that Peter and Harry attend, a power spike causes the fusion reactor to destabilize. Octavius refuses to shut down the reactor, which goes critical, killing his wife Rosalie, and burning the inhibitor chip blocking the arms from his nervous system. Peter, as Spider-Man, shuts the experiment down, destroying it in the process.
At a hospital, doctors prepare to surgically remove Octavius’ harness. Without the inhibitor chip, the now sentient arms defend themselves by killing the doctors. Upon regaining consciousness and seeing the carnage, Octavius escapes and takes refuge at a harbor. Becoming increasingly influenced by the arms’ AI, he decides to re-try his experiment. He robs a bank to fund a second experiment. Peter and May coincidentally are there, and Octavius takes May hostage. Peter rescues her, but Octavius flees with the stolen money. The Daily Bugle subsequently dubs the scientist Doctor Octopus.
Mary Jane becomes engaged to astronaut John Jameson, the son of Bugle editor J. Jonah Jameson. Peter suffers an emotional breakdown over his inability to balance his life and loses his powers. He quits being Spider-Man, returns to his normal life, and unsuccessfully attempts to reconcile with Mary Jane. A garbageman brings Peter’s costume to Jameson, who takes credit for driving Spider-Man into hiding. Peter tells May the truth behind his uncle Ben’s death and how he is responsible. May forgives him, but the rise in New York City’s crime rates worries Peter.