Melvin Junko is a stereotypical 98-pound weakling. He works as a janitor at a health club in the town of Tromaville, where the customers–particularly Bozo , Slug , Wanda and Julie–harass him constantly. His tormentors get more and more violent until he is tricked into wearing a pink tutu and kissing a sheep. He is then chased around the health club by witnesses of the event where he eventually jumps out of a second story window. He lands in a drum of toxic waste and is irradiated and deformed by the accident. He suddenly lights on fire and runs down the street in a ball of flames. Melvin quickly takes a bath and mysteriously transforms into a hideously deformed creature of superhuman size and strength.
Later, a group of drug dealers, led by the criminal Cigar Face , are harassing a police officer by the name of O'Clancy , trying to buy him off. When he refuses to accept the money, Cigar Face and his gang prepare to castrate Officer O'Clancy. Out of nowhere, a large creature comes and saves the day, showing in a brutally violent way that he does not like evil in any form. When he is done taking care of them he puts a mop on all their faces, which becomes his call sign. Officer O'Clancy is initially terrified of the creature but soon learns he was only trying to help and will not hurt him.
The officer's rescuer was the Toxic Avenger , who is Melvin having been transformed by the incident. He then tries to return home but his mother is terrified of him and will not even let him in the house. The Toxic Avenger then goes to the junkyard and builds himself a makeshift home.
Elsewhere in Tromaville, a gang of three men are holding up a Mexican food restaurant. The men kill one of the patrons, and then attack a blind woman named Sarah . They kill her guide dog and are about to rape her when The Toxic Avenger arrives. Toxie then has another bloody brawl with crime, taking care of the gang with unforgiving zeal. The Toxic Avenger sees that Sarah is beside herself by the loss of her dog and the traumatic experience. He takes her back to her home, where they begin to get to know one another and subsequently become involved.
When the Toxic Avenger goes back to his crime fighting ways, he makes way for the health club. There, he takes care of the popular girl Wanda who was involved in the plot that turned him into the creature he is now. He burns Wanda in a sauna by placing her on the heater. Aterward, Toxie is relieving himself in a back alley when a limo pulls up and a pimp tries to push a 12-year-old girl onto him. When he starts to fight back to save the girl, a group of men come out of the limo, in which he fights them all off and saves the girl. The Toxic Avenger returns to the health club and attacks the other tormentors who were responsible for what happened to him. He then confronts his archenemies Bozo and Slug, ending in Slug getting thrown out of a moving car and Bozo driving off the side of a cliff.
The leader of the crime ring in Tromaville, who turns out to be Mayor Belgoody , is horrified of what is happening to his goons. He is worried that it will lead back to him and wants Toxie to be taken care of. A group of men, lead by none other than Cigar Face, surround Toxie all pointing guns at him. Right before they fire he jumps up to a fire escape and they end up shooting each other. When the Toxic Avenger kills a seemingly innocent old woman in a dry cleaning store (she is in fact a leader of an underground white slave trade), Belgoody looks at this as his opportunity and calls in the National Guard.
Back in his junkyard home, the Toxic Avenger is terrified of what he has become. He and Sarah decide to move away from the city and take a tent into nearby woods. They are not there long before they are discovered. The Mayor and the National Guard come to kill him but the people of Tromaville will have none of it. The Toxic Avenger saved them on numerous occasions and they are now his friends. The Mayor's evil ways are revealed, and the Toxic Avenger proceeds to rip out Belgoody's organs to see if he has “any guts”. The movie ends with a reassurance that wherever evil brews in Tromaville, you will find the Toxic Avenger.
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