Iron Man, Thor and Captain America finally figure out that life is easier when they work together, and stop fighting long enough to take a patient Loki back to the S.H.I.E.L.D. HQ on a battleship ... They set sail until suddenly giant propellers detach themelves from the ship and the battleship transforms into a giant flying fortress - a 'helicarrier' and rises above the clouds (because being in a giant fortified ship quite safe on the waves doesn't cut it for superheroes). They flick the switch for reflective panels, and the cloud city becomes invisible, of course.
Loki seems quite relaxed, so they know he has a gameplan. Stark plants a hacking device on the bridge, and together with Banner they figure out SHIELD's true agenda - to use unlimited energy to create weapons of mass destruction. As they argue, Loki's staff serves as a homing beacon to attract his men - including the turned Hawkeye with a certain sparkle in his eye.
Meanwhile Black Widow plays an act on Loki to find out his plan, and works out that The Hulk will be his secret weapon.
Outside, Hawkeye takes aim, judges the wind resistance, and then launches an explosve arrow that takes out one of the engines. The rest of the men board the helicarrier from small fighter jets, and suddenly (and surprisingly) they have about 50 or more bad guys boarding the fortress.
The ship is rocked by more explosions, causing Black Widow and Bruce Banner to fall a few levels with a blast. Bruce is angry ... and turns into The Hulk. He wants to harm Natasha, and chases her through the ship causing carnage and corners her. Nick Fury has sent in the cavalry in the form of a fighter jet, to distract the Hulk so Natasha can escape. Hulk jumps onto the jet as it flies away, and the pilot manages to eject. The Hulk falls to earth.
Nick Fury tries to keep the enemy away from the bridge, but Hawkeye has a special 'hacking device' arrow that manages to hit exactly the mark (and be the right fit - these guys must go to the same hardware store) and the electrics are cut - the ship starts to plummet to earth.
Steve Rogers and Stark take it on themselves to get outside and start the engines. Meanwhile Thor confronts Loki, who can now escape his cell without the lights on. Thor jumps at him, but again it's the 'oldest trick in the book' when you use a magical reflection of yourself to confuse other people. Thor falls into the cell, and Loki now locks the doors again. Agent Phil shows up with a super-cannon weapon ... but wait, he didn't expect the oldest trick in the book. He is stabbed by the real Loki standing behind him.
Loki then sends his brother crashing down to earth in the cage meant for The Hulk. Just before it hits the earth, Thor smashes the glass and jumps out to safety.
Agent Phil manages to shoot Loki, but it's not enough and doesn't do him much harm. Loki hitches a ride away on an enemy fighter jet.
Meanwhile Natasha fights with Hawkeye on a walkway, and manages to smack him in the head hard enough that he comes to his senses.
Iron Man manages to manually start one of the propeller engines, and Rogers releases the escape lever just in time so he can get out.
Dejected, the remaining heroes meet on deck, and Fury encourages and motivates them to go after Loki. They know he'll use a public platform for his next big act, and Stark knows where it'll be. He suits up and goes home - and finds his enemy.
Loki tries to turn Stark, but Stark doesn't really have a heart to turn. Stark crashes out the top-storey window to plummet towards earth (he does a lot of this 'plummeting towards earth') but has managed to fix on his metal bracelet that summons a new version of his special suit that attaches itself around him just in time before he squashes a few civillians. Loki gets away and the portal is opened to bring in the Chitauri.
The superheroes - Iron Man, Captain America, Thor, Black Widow, Hawkeye and now Bruce Banner meet up in downtown NY to take on the aliens. Banner walks out towards a giant alien flying/floating worm and instantly lets his anger get the better of him and rips it apart.
The Chitauri keep on coming, and The Avengers, working together, try their best to save civillians and kill as many bad guys as they can.
The Hulk corners Loki, who says as a demi-god he can't be harmed. Hulk then grabs him and slams him around like a rag-doll (in a laugh-out-loud moment and best scene from the movie), effectively taking him out.
Dr Selvig, now recovering from a nasty bump, is back to his senses. He knows that the only way to close the portal is to use Loki's staff to turn off the Tesseract.
Meanwhile the Earth leaders have decided to use a nuclear weapon on Manhattan. The armed fighter jet approaches and fires off the nuke.
Black Widow manages to turn off the Tesseract. Iron Man takes the missile, and pushes it up through the closing portal and out into space. His suit's power and oxygen supply are running out, and he just manages to point the missile towards the alien asteroid-mothership. The nuclear weapon hits and obliterates it.
Stark falls back to Earth, and just makes it back out through the closing portal. He picks up speed and is about to hit with a clang when Hulk catches his friend and breaks his fall.
The Avengers are heroes, although the jury is still out with those who weren't in the city. Thor escorts the Tesseract and Loki back to Asgard to stand trial. Fury lets his heroes take a breather, because he knows they'll be back when they are needed.
And - the extra end-credit scene (brought forward 20 minutes thankfully, so just after the 3D credits!): The leader of the alien invasion force stands on a broken piece of rock in space and chats to the mastermind behind it all. I'm not well-up on my superhero comics, but they say it's 'Thanos' (-thanks 'Nitin' for the help!). The alien insists that Earth is too strong now ... but the big boss has other plans.