Even with the death of Omega in the last game, Dr. Weil is still the undisputed leader of Neo Arcadia. With his iron fisted rule, both humans and Reploids alike are now under oppression.

The game begins with a human Caravan escaping from what was once their home, being chased by a new type of enemy soldiers, the Variant. Zero and the Resistance join the chase, fighting off the Variants and saving the humans. Ciel and Zero meet the leader of the Caravan, Neige, who tells them about the current situation in Neo Arcadia, and that she is now leading her group to Area Zero, where a human settlement was established.

The Resistance convoy follows the Caravan into Area Zero. Exploring the habitat, Zero soon encounters the Einherjar Eight Warriors and their leader, Craft. Through them, Zero learns of Operation Ragnarok, a military operation where Weil plans to obliterate all inhabitable places like Area Zero so that humans would stop running away from Neo Arcadia. The Einherjar and Craft are the ones who will execute this plan, thinking the humans are foolish to even think of running away from Weil's rule.