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Stan lee's cameo in the Marvel Cinematic Universe are as follows -

In Iron Man (2008) Stan lee appears with three blonds to resemble Hugh Hefner.

In The Incredible Hulk (2008), Lee appears seen drinking soft drink mixed with Bruce Banner's blood.

In Iron Man 2 (2010), Lee is greeted by Tony Stark as "Larry King".

In Thor (2011), Lee appears among many people at the site where Thor's hammer Mjolnir lands on earth. He tears the back off his pickup truck in an attempt to pull Mjolnir out of the ground with a chain and causes everyone to laugh by asking, "Did it work?".

In Captain America: The First Avenger (2011), Lee portrayed a general in World War II, who mistakes another man for Captain America/Steve Rogers, commenting, "I thought he'd be taller."

In The Avengers (2012), Lee makes a cameo appearance as a random citizen in the park asked about the Avengers saving Manhattan. Lee's character responds, "Superheroes in New York? Give me a break", and then returns to his game of chess. He also appears in a deleted scene, apparently as the same character: when a waitress flirts with Steve Rogers, he says to him, "Ask for her number, you moron!" (source:Wikipedia)

So these random appeararances conflict with the shared universe, especially for the case of Captain America: The First Avenger.

So how does Stan Lee's random appearances work in the Marvel Cinematic Universe?

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I don't feel the chracters would conflict because all his portrayals are so random and trivial they don't need to be repeated again in all the coming movies. – Mistu4u Mar 7 '13 at 8:21
It's like asking how Dr. Evil and Austin Powers work. Different characters played by the same actor. – TylerShads Mar 7 '13 at 14:13
possible duplicate of Why does Stan Lee play random extras in Marvel films? – PriestVallon Mar 12 '13 at 1:04
This does not appear to me to be a duplicate of the thread posted by @PriestVallon. My suggestion is to leave it open. – Pᴀᴜʟsᴛᴇʀ2 Aug 6 '13 at 15:31
The best Stan Lee movie cameo, though, wasn't in the list above. Hard to say, whether it's in the Spider-Man reboot (janitor wearing headphones) or in Big Hero 6 (post-credits scene). :P – Mason Wheeler Apr 30 '15 at 17:57
up vote 10 down vote accepted

Stan's appearances are a sort of wink to the screen, an in-joke to those that know who he is. All of the characters that he's appeared as have had no material signifigance to the universe, they're just there for on-screen fluff. There's no need to try and retcon these characters, they're all different characters played by Stan with no real story purpose.

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To elaborate more on DForck42's answer, it is an easter egg type of feature and a trademark. Much like Hitchcock appearing in all of his movies with eager fans trying to find him. The difference being fans are always eager to see what crazy role he'll be playing. It's an ode to the man who created (or had a role in creating) all of these characters. – user4308 Mar 7 '13 at 15:49
"an in-joke to those that know who he is" -> and also the reason why today most people know who he is. :-) – Vedran Šego May 10 '15 at 2:58

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