While web swinging around the city one night, Spider man comes across a group of four muggers assaulting an elderly, white-haired gentleman. Spider man runs the attackers off, but the victim, instead of thanking Spider man, puts him into a trance. Revealing himself to be the magician Xandu, the man conjures up an image of the Crystal of Kadavus, a skull-shaped gem hidden in the Sanctum Sanctum of Dr. Strange. Xandu orders the hypnotized Spider man to steal the gem for him, warning him not to allow himself to be captured by Dr. Strange. Dr. Strange is Spider man long sworn enemy, explains Xandu as he plants the falsehood in Spider man’s mind, and he has vowed to slay Spider man on sight. There, with a wave of his hands, Xandu magically teleports Spider man to Strange's mansion in Greenwich Village. After Spider man disappears Xandu gloats that the Crystal of Kadavus will make him master of the cosmos.
As Dr. Strange, seated in the lotus position, peruses and meditates over the writings of his late master, the Ancient One, Spider man suddenly appears in a room down the hall. Xandu, communicating mentally with Spider man, orders him to move swiftly and silently to avoid interrupting the mystical master's contemplations. But Spider man accidentally knocks an urn off a table, and Dr. Strange comes to investigate. Strange welcomes Spider man to his abode, but Xandu's hypnotic spell distorts what Spider man sees and hears, as it appears to him as if Strange is about to attack. Strange does not understand why Spider man is all of a sudden acting so defensively, but when Spider man tries to web him up, the mystic master counters with a spell. This reinforces Xandu's illusion that Strange is Spider man’s enemy, even though Strange explains that he wants to subdue Spider man only to determine the cause of his apparently madness. Strange traps Spider man within the Ribbons of Raggador, but Spider man snags an ornamental gargoyle with his webbing and brings it down on Strange's head, knocking him unconscious. Spider man then quickly finds the crystal's hiding place, and Xandu, who has been observing the entire battle, telepathically, teleports Spider man into his home.
In Xandu's West Side dwelling, as Spider man stands motionless behind him, the magical uses the Crystal of Kadavus to focus certain cosmic forces onto the Wand of Watoomb. The incantation regenerates the wand, whose power has been drained by Dr. Strange after he had Spider man had last fought Xandu. The most powerful weapon in all of necromantic lore is once more his to wield, exults Xandu, savouring his victory. Strange thought he has erased Xandu's memory in their last battle, recalls Xandu, but unknown to him Xandu in desperation had sent his mind into the Ethos (it is not explained just what the Ethos is, it may be Limbo or some other alien dimension) until the threat has passed. For some time Xandu wandered aimlessly, a derelict, but eventually his memory and knowledge of mystic arts returned.
His initial reminiscence concluded, Xandu turns to Spider man and explains that he obtained the Wand of Watoomb to restore a life, not just to dominate the world. One day, he recalls, when he was still a young and inexperienced magician, one of his spells went awry. A bolt of arcane energy stuck Melinda, his fiancée and rendered her comatose – a sleep that resembles death. Xandu searched for a cure for years until he found the Wand. But when he started to use the Wand for other things than restoring his beloved to consciousness, Dr. Strange and Spider man took it from him. Just as Xandu is railing against his foes, Dr. Strange materializes in the room. Xandu is astonished that Strange traced him so easily and he realizes that Dr. Strange could spell Melinda's death. So he uses the Wand of Watoomb to create a miniature cosmos in which he, not Doctor Strange, is the Sorcerer Supreme (on earth Dr. Strange is the Sorcerer Supreme, far too powerful for Xandu to defeat). Xandu swiftly teleports himself, Strange, and Spider man into his newly created dimension.
Xandu's universe is filled with shimmering colours and evanescent spheres. Holding the Wand, Xandu stands on a chunk of matter while Dr. Strange and Spider man float freely nearby. Xandu is much younger here, a sorcerer at the height of his powers, all trace of whiteness and age gone from his features. Strange challenges Xandu with twin mystic bolts for his hands, but Xandu transforms the bolts into harmless flowers and then stuns Strange with a powerful beam of mystic energy from the Wand. When Spider man attempts to web Xandu up, Xandu turns the webbing around and webs up Spider man instead. In this world, proclaims Xandu, it is he who makes the rules. Spider man manages to break free of the webbing and he and Strange attack Xandu simultaneously. But Xandu causes Spider man’s webbing and Strange mystic bolts to collide before they reach him. Using the Wand, Xandu swiftly reshapes the bolts and webbing and returns them with explosive force, entangling Spider man and Dr. Strange.
As Xandu gloats that their power are useless against him, Dr. Strange decides to cast a spell that may enable himself and Spider man to circumvent Xandu's dominance. It is a spell that has never before been attempted, and it is possible that he may be unable to reverse its effect, but at this point he has no other choice. Presently, as Spider man and Strange seem to dangle like tiny puppets from Xandu's enormous fist, Spider man tires to hit Xandu in the face with webbing. Much to his surprise a pair of mystic bolts emerge from his hands instead of jets of web fluid and this unexpected assault puts Xandu off balance. Strange loses no time freeing himself. Xandu cannot understand how Spider man gained mystic powers in Xandu's own realm, but when Strange hits Xandue in the face with twin steams of webbing, Xandu comprehends that Strange and Spider man have somehow exchanged powers.
Strange urges Spider man to use his mystic energies while Xandu's face is still webbed but Spider man has no idea how to do this. Strange tells him to hurl his new gained powers, so Spider man winds up and pitches a mystic bolt like a baseball at Xandu's head. This makes Xandu release the Wand of Watoomb, once more ageing and weakling the magician so that Strange can knock him out with a single punch. Spider man then retrieves the Wand and Strange simply throws it into space to drift forever out of Xandu's reach. Then Dr. Strange again trades power with Spider man and casts a spell that swiftly transports himself, Spider man and Xandu back to Xandu's lair.
Xandu weeps that his believe Melinda is now condemnable to dreamless sleep forever, but Strange replies that there is much that might still be done. Hopeful Xandu brings Strange and Spider man to Melinda's chamber where Strange's mystic amulet bathes her body in light. But after the light fades, Strange tells Xandu sadly that nothing can be done. Melinda is not in a sleep that resembles death, says Strange, but in a death that resembles sleep. Not even he can restore her to life. When Xandue realizes that his careless mystic bolt actually killed his fiancée, he breaks down in tears, and vows to find some way to restore her. As Strange and Spider man turn to leave. Xandu falls sobbing across Melinda Coffin.