Mars selects Larry's "Commando Elite" action figures for the project, with Irwin's "Gorgonites" – peaceful monsters intended to be educational toys – as their enemies.

Alan develops a crush on his neighbor Christy Fimple, and returns home to discover Archer in his backpack, realizing the toys are self-aware and capable of learning.

That night, Chip Hazard activates his comrades to attack the Gorgonites, and Alan finds the store in disarray and the new toys missing.

Infiltrating her house, they capture her younger brother Timmy, sedate their parents, and use Nick Nitro's AI chip to transform Christy's "Gwendy" fashion dolls into reinforcements.

The Commando Elite pursue them with improvised vehicles built in the Fimples' garage, but are destroyed in a fiery crash; only Chip Hazard survives.

Chip Hazard arrives with a new army of Commando Elite and more improvised vehicles and weapons, having hijacked a recall shipment driven by Joe, and lays siege to the house, cutting off the electricity.

Christy, Irwin, and Larry make their way to the Fimples' house to ensure a larger surge, and the Gorgonites emerge and fight back against the Commando Elite.

Alan and Christy start a relationship, and he discovers the Gorgonites survived the EMP underneath the Fimples' satellite dish.

Alan brings the Gorgonites to Yosemite, sharing a goodbye before sending them off in his father's toy boat to find their home.

The site's critical consensus reads, "Small Soldiers has plenty of visual razzle-dazzle, but the rote story proves disappointingly deficient in director Joe Dante's trademark anarchic spirit.

Grant claimed that he had met with Amblin Entertainment in 1991 to discuss the potential to expand his short film into a full feature.

In addition, a video game based on the film was developed by DreamWorks Interactive and released by Electronic Arts on September 30, 1998.

[11] Four video games were released in 1998: Burger King created a line of kids' meal toys to promote Small Soldiers.

Burger King executives claimed this caught the company by surprise as they were led to believe the film would receive no higher than a PG rating.

According to Joe Dante, the MPAA gave the film a PG-13 rating due to the scene in which the Commandos put drugs in Phil and Marion's drink.