The Isle of Dread, like the Expert Rulebook it was usually purchased with, is meant to introduce players and dungeon masters who had up to that point only been familiar with dungeon crawl-style adventures, to wilderness exploration. As such, the adventure has only a very simple plot, even by then-current standards. The characters somehow find a fragment from a ship's log, describing a mysterious island on which many treasures can be found, and set out to explore it. ((Though I will be adapting this a little... your friendly D.M))
Typically, the characters will first make landfall near the more or less friendly village of Tanaroa, which is reminiscent of the village depicted in King Kong, and after possibly dealing with some troublesome factions in the village, set out from there to explore the interior of the island. In the course of their explorations, they may find a number of other villages of intelligent creatures (though mostly not of familiar species like humans and elves), numerous hostile monsters and the treasures they guard, and a band of pirates. Many prehistoric creatures, including dinosaurs, are prominently featured, especially in the original printing of the adventure. Near the center of the island is a hidden temple inhabited by monstrous, mind-bending creatures known as kopru; the characters may stumble across it or learn that it is a source of problems for the other inhabitants of the isle, and the climax of the adventure typically consists of the characters exploring this temple, battling its inhabitants and uncovering its secrets.