Percy is forced to cut his time with Rachel Dare (his mortal friend) short when Charles Beckendorf (son of Hephaestus) arrives to take Percy to Kronos' ship in order to destroy it. Due to a spy at camp, Kronos was expecting the attack. Charles and Percy succeed in destroying the ship, but only because Beckendorf is willing to sacrifice his life for the cause. Percy, injured, is brought to his father, who is fighting a losing battle against Oceanus (the Titan sea god). Upon his return to camp, Percy is finally told the entire Great Prophecy, which he interprets to mean that, no matter the decision he makes when he turns 16, he will die.

After burying Beckendorf, Percy decides he must take drastic measures to ensure his victory over Kronos, so he agrees to follow Nico into the Underworld, where he will bathe in the river Styx (a la Achilles). On their way, they meet May Castellan, the mother of Luke (who is now the physical vessel for Kronos). May was a broken woman - she was meant to be the next Oracle, but she went insane due to a curse Hades had placed upon the Oracle years before. Percy bathes in the river Styx, and he is kept alive due to his mother's blessing, and his thoughts of Annabeth.

With his new powers, Percy, Annabeth and the other campers head to Manhattan to hold off Kronos' invasion (the gods are busy trying to defeat Typhon as he rampages across the country). All the mortals in the city have been put to sleep by Morpheus, so it is only the demigods and Kronos' army present. Grover, also put to sleep by Morpheus some months before, is revived by Percy and he gathers the nature spirits to help in the looming battle

Meanwhile Rachel, sensing Percy is in danger and that her destiny awaits, agrees to go to the school her father wishes if he will return her to New York. The battle back at New York continues to rage, and the demigods are slowly forced back to the Empire State building (even with the aid of Thalia and the other Hunters of Artemis). Nearly beaten, the demigods get reinforcements from Chiron and hundreds of other centaurs. Rachel also arrives to give Percy the message: you are not the hero. A giant monster is released on the army (a drakon) and Rachel tells them that only a child of Ares can kill it, though none are currently at the battle. Soon, however, the Ares campers arrive, but their leader (thought to be Clarisse) is killed fighting the drakon. The real Clarisse arrives at this point and slays the drakon. The imposter was Silena (daughter of Aphrodite and Beckendorf's girlfriend). She was also, we learn, the spy.

Percy gets his father's attention by sitting on his throne, and convinces Poseidon that he must abandon his temple to help the other gods defeat Typhon, or their protection of Olympus will be in vain. He also gives Pandora's jar (a temptation given to him earlier by Prometheus) to Hestia, the goddess of the hearth, as hope is strongest at the hearth. Nico and Hades soon join the fight, finally tipping the scales in the demigod's favor. However, Kronos creates a barrier separating himself and his guard from the main fighting force, and releasing the mortals from their sleep.

Kronos ascends to Olympus as Percy, Annabeth, and Grover follow close behind. At the top, we get a vision of the gods (with Poseidon's help) finally sending Typhon to Tartarus. Annabeth forces Luke to resurface in his body, and Percy decides to give Luke his own knife back so that he can destroy his body and defeat Kronos. The gods return, and celebrate the three heroes. Grover is made a lord of the Wild, Annabeth is allowed to redesign Olympus, and Percy is given the option to become immortal. He chooses, however, to make the gods swear by the river Styx that they will acknowledge all their children in the future, and that the children of the lesser gods will have a place at camp half-blood.

The curse broken Rachel is able to become the next Oracle of Delphi, and she immediately makes a prophecy. Percy and Annabeth kiss, finally becoming boyfriend and girlfriend.