Firion, Maria, Guy, and Leon are attacked by Palamecian Black Knight soldiers and left for dead. Firion, Maria, and Guy are rescued by Princess Hilda, who has established a rebel base in the town of Altair after her kingdom of Fynn was invaded by the Emperor. Hilda denies their request to join the rebel army because they are too young and inexperienced. The three set off for Fynn in search of Leon; there, they find a dying Prince Scott of Kashuan, Hilda's fiancé, who informs them that a former nobleman of Kashuan, Borghen, betrayed the rebellion and became a general in the Imperial army. The party returns to Altair to notify Hilda. She allows the group to join the rebellion and asks them to journey north to find mythril, a metal that could be used to create powerful weapons. The party makes its way north to the occupied village of Salamand, where they save the villagers forced to work in the nearby mines, kill Borghen, and retrieve the Mythril.
For their next mission, the party is sent to the city of Bafsk to prevent the construction of a large airship known as the Dreadnought; however, it takes off just as they arrive. After retrieving the Sunfire, a weapon that can blow up the Dreadnought, they watch helplessly as an airship with Hilda on board is captured by the Dreadnought. When the Dreadnought lands to stock up on supplies, the party rescues Hilda and throws the Sunfire into the airship's engine. Before escaping the explosion, the party encounters a dark knight Maria recognizes as Leon.
On his deathbed, the king of Fynn tasks the party to seek the help of the seemingly extinct dragoons of Deist. There, the party finds only a mother with her son, learning that all but one of the dragoons are dead, partly as a result of imperial poison. After placing an egg of the last wyvern in a cavern, the party returns to Altair and finds the Hilda they rescued is a lamia in disguise. The party slays the imposter and rescues the real Hilda before successfully reclaiming Fynn from the imperial forces. They then travel west, searching for a powerful magic item, joining forces with the last surviving dragoon. The party returns to Fynn and sees that many towns have been destroyed by a cyclone summoned by the Emperor. The party calls upon the newly born last wyvern to take them to a castle inside the cyclone, where they confront and kill the Emperor. Everyone celebrates the Empire's defeat until a mortally wounded Fynn soldier arrives and reveals that Leon has taken the throne and plans to destroy the rebels with the Imperial army.
The party enters the castle of Palamecia and confronts Leon. The Emperor reappears in the throne room in a new demonic form, revealing he has become the ruler of Hell and returned to destroy the entire world. Ricard sacrifices himself to allow the party to escape with Leon and the wyvern. Palamecia Castle transforms into Pandaemonium, the capital of Hell. Leon agrees to help the group seal the Emperor away. The party travels to the Jade Passage, an underground passage to the underworld, and finds the portal to Pandaemonium, where they finally defeat the Emperor. Afterward, Leon chooses to leave in response to the trouble he caused, though Firion assures him that he will be welcomed back if and when he returns.
In the Dawn of Souls, an extra story follows the spirits of Minwu, Josef, Scott and Ricard as they arrive in Arubboth, the palace of Heaven and twin to Pandaemonium where the group encounter the spirits of those the Empire killed. They eventually reach the top of Arubboth and find the Emperor's "light side" which split from his dark counterpart in Pandaemonium when Firion killed him. He offers them eternal life in return for their forgiveness, but visions of their loved ones convince them that the Light Emperor is just as evil as the Emperor of Hell. The party defeat the Light Emperor, and their spirits visit the living world one last time to watch the celebrations before fading away.
