In 1939, several New York City costumed heroes become vigilante crime fighters. They form a loosely organized group known as the Minutemen. As the original costumed heroes age and retire, they are replaced by a younger generation of costumed heroes. In 1966, the new generation of costumed heroes gathers for an organizational meeting where one of them proposes the foundation of a new group of crime fighting heroes. Although the suggestion does not come to fruition, it does introduce many of the individual vigilantes to the others. Several alliances result.

In 1959, a strange accident happens at a government physics research laboratory, which results in the transformation of Jon Osterman into Dr. Manhattan, an actual super-hero with supernatural abilities. While other costumed heroes are simply highly trained and highly motivated athletes, Dr. Manhattan can control the very nature of reality, creating atoms from nothing, teleporting objects, and existing in a sort of extra-dimensional time. He is announced to the public and gradually becomes a vital component of the United States of America's strategic defense program.

Throughout the late 1960s and early 1970s, the vigilante activities of the costumed heroes begin to become unpopular with the media, the police, and citizens. As anti-vigilante riots erupt, the costumed heroes respond with increasing brutality. Finally, in 1977, the government passes a law, which makes vigilante activity a criminal offense. With a few exceptions, costumed heroes hang up their costumes and pursue other lines of work - many announce their formerly secret personal identities and seek to capitalize on their recent fame. Others prefer to retire into obscurity, while a very few ignore the law and continue to seek justice on their own terms.

By 1985, nuclear war with Russia seems unavoidable. The world is deeply divided, the cold war is raising international tensions, and armies are being deployed. One retired costumed hero, now fabulously wealthy, decides he must intervene to deter nuclear annihilation and unite the world in a common cause. His amoral plan is to play an enormous practical joke on the world. He fakes an alien invasion by an extra-terrestrial being with hostile intent. The attack results in the deaths of millions of people, but does halt the seemingly unstoppable march to international nuclear war.