Rorschach, Nite-Owl and Silk Spectre find out Veidt's plan to destroy New York City with a giant squid implanted with a device unleashing terrible psychic waves that he created (the Comedian discovered this so Veidt killed him to keep it a secret), in order to convince world leaders that an Alien attack is among earth and thus, they would form an alliance so that they could defend against the spacial threat. Nite-Owl reluctantly agrees, although the idea is evil, it is the only way to bring peace.
Rorschach, seeing morals as only black and white, refuses and storms out to inform the world of the plan. Doctor Manhattan realizes this is truth as well, so he confronts Rorshach and ultimately annihilates him outside the Karnak base.
Silk Spectre and Nite-Owl leave as New York City is decimated. Jon leaves Earth to enlighten himself, maybe create some life of his own.
Years later, Silk Spectre and Nite-Owl have gone incognito and changed their names. They visit her mother, now elderly. It is important to note that she kisses the Comedian's picture, which relays the fact that the Comedian was not entirely bad. Perhaps she even had feelings for him.
Furthermore, a reporter known as Seymour stumbles on Rorshach's journal that he left in the crank file. His boss is yelling at him to find anything to send to the press. Of course, the book ends with Seymour holding the journal, hinting to the reader that all of the destruction by Veidt, that was supposed to create world peace, may have all been for nothing.