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In 965 AD, Odin, king of Asgard, wages war against the Frost Giants of Jotunheim and their leader Laufey, to prevent them from conquering the Nine Realms, starting with Earth. The Asgardian warriors defeat the Frost Giants in Tønsberg, Norway, and seize the source of their power, the Casket of Ancient Winters.

In the present,[b] Odin's son Thor prepares to ascend to the throne of Asgard, but is interrupted when Frost Giants, secretly allowed in by his brother Loki, attempt to retrieve the Casket. Against Odin's order, Thor travels to Jotunheim to confront Laufey, accompanied by Loki, childhood friend Sif and the Warriors Three: Volstagg, Fandral, and Hogun. A battle ensues until Odin intervenes to save the Asgardians, destroying the fragile truce between the two races. For Thor's arrogance, Odin strips his son of his godly power and exiles him to Earth as a mortal, accompanied by his hammer Mjölnir, now protected by an enchantment that allows only the worthy to wield it.

Thor lands in New Mexico, where astrophysicist Dr. Jane Foster, her assistant Darcy Lewis, and mentor Dr. Erik Selvig find him. The local populace finds Mjolnir, which S.H.I.E.L.D. agent Phil Coulson soon commandeers before forcibly acquiring Foster's data about the wormhole that delivered Thor to Earth. Thor, having discovered Mjölnir's nearby location, seeks to retrieve it from the facility that S.H.I.E.L.D. has constructed, but he finds himself unable to lift it and is captured. With Selvig's help, he is freed and resigns himself to exile on Earth as he develops a romance with Foster.

Loki discovers that he is Laufey's biological son, adopted by Odin after the war ended. Loki confronts Odin, who wearily falls into the deep "Odinsleep" to recover his strength. Loki takes the throne in Odin's stead and offers Laufey the chance to kill Odin and retrieve the Casket. Sif and the Warriors Three