And so, the dark knight Cecil was stripped of his command as the captain of the Red Wings. He and the master dragoon Kain head toward the dark valley for the village of Mist. The advent of the airship marked the realization of Baron's dreams, but also the birth of its militarism. With its Royal Air Force Red Wings, Baron soon reigned supreme. Now, as monsters multiply and stir unrest, Baron only exploits its power to collect the world's Crystals. Why? The Crystals silently shed their light...
The Kingdom of Baron has begun an unprovoked military campaign against other countries. Lord Captain Cecil Harvey and the Red Wings air force attack the wizards' town, Mysidia, and seize the Water Crystal. Disturbed by his actions, Cecil asks the King of Baron why he is being given such orders. The king strips Cecil of his rank, and when Cecil's friend Kain Highwind speaks up, the king orders them both to Mist to kill its Eidolon and deliver a Carnelian Signet. Cecil's love, Rosa Joanna Farrell, and old friend, Cid Pollendina, try to assuage his self-loathing before he departs, although they, too, are disturbed by Baron's actions.
Cecil and Kain fight their way through the Mist Cave and defeat the dragon Eidolon that guards the exit. When they arrive in the village, the Carnelian Signet releases Bombs which raze the buildings and kill most of the inhabitants. They find a young girl named Rydia mourning her mother, the dragon's summoner, who was killed by the death of the Eidolon. Cecil and Kain are horrified that they were sent to slaughter a town, and resolve to oppose Baron. When Cecil apologizes to the girl and tries to take her to safety, Rydia is enraged and summons Titan. When the earthquake stops, Kain is gone and Rydia is unconscious.
Cecil brings Rydia to Kaipo, the nearest town. Baronian soldiers arrive during the night to kill Rydia, but Cecil fights them off and earns her trust. The next day they find that Rosa followed Cecil to the town and came down with Desert Fever. As the only cure is a Sand Pearl from Damcyan, Cecil and Rydia set off in that direction. They team up with the sage Tellah in the Underground Waterway, as he is also going to Damcyan in pursuit of his daughter Anna and the bard she eloped with. The three witness the Red Wings bomb the castle and seize the Fire Crystal.
Inside, they meet the bard, actually Prince Edward Chris von Muir, and Anna, who is mortally wounded. Anna stops her father from attacking Edward and dies in his arms. Edward explains that she shielded him from the attack, which also killed his parents and most of the castle, and that the Red Wings are now led by a man named Golbez. Enraged, Tellah leaves to seek revenge. Although Edward is paralyzed by grief, Rydia and Cecil berate him and Edward agrees to help them find the Sand Pearl. They go to the Antlion's Den and defeat the owner, obtaining the needed item.
The pearl cures Rosa and she informs them that Baron is planning to attack Fabul for the Crystal of Wind. She joins the party despite Cecil's protests, and they set off. When they cross Mount Hobs, they meet a Fabul monk named Yang Fang Leiden. Together, they warn the King of Fabul of the impending attack and prepare a defense. The Red Wings' assault is too strong and they are driven back to the crystal room, where Kain appears and attacks Cecil. When Rosa makes him hesitate, Golbez arrives and incapacitates the defenders. Seeing Cecil's concern for Rosa, Golbez abducts her and departs with his forces.
Cecil, Rydia, Edward, and Yang go after them. Their ship is attacked by the sea monster Leviathan, which swallows Rydia and shipwrecks Cecil alone on the shores of Mysidia. The townspeople are hostile and inflict various status effects on him in revenge for the Red Wings' attack. Cecil meets with the Elder, who tells him to go to Mount Ordeals and become a Paladin to atone for his crimes. He assigns twin mages Palom and Porom to accompany him.
The party reunites with Tellah on the mountain, as he is there seeking the power of Meteor, an ultimate magic spell. Golbez sends the Archfiend of Earth, Scarmiglione, to stop Cecil, but the party defeats him. A mysterious voice at the summit calls Cecil his son and tells him to vanquish the Dark Knight. Cecil transforms into a Paladin and is attacked by a doppelganger of his Dark Knight self, but he correctly defends rather than attacking and it disappears. The voice of his father grants Cecil his light. The encounter restores Tellah's memory and he learns Meteor. The Elder gives Cecil the Mythgraven Blade and tells him the Mysidian Legend, believing it speaks of Cecil.
Cecil and the others infiltrate Baron via the Devil's Road. Golbez has manipulated the soldiers of Baron and the "king" is revealed to be Cagnazzo, the Elemental Archfiend of Water. Yang has been brainwashed, but a fight brings him back to his senses and he rejoins the party. They destroy the traitorous Baigan and the false king, but Cagnazzo locks them in a deathtrap. Palom and Porom petrify themselves to stop the walls from crushing the others and cannot be restored. Cid, who escaped imprisonment and joined the party in battle, gives them his newest airship: the Enterprise.
They encounter the brainwashed Kain in the Red Wing fleet, who forces Cecil to retrieve the Crystal of Earth in exchange for Rosa's life. The party goes to Troia, but finds that the crystal was stolen by the Dark Elf. They find Edward in the Troians' care, having been injured in the shipwreck. He gives them a Whisperweed and uses it to help them defeat the Dark Elf from the hospital, despite his condition. In gratitude, the Epopts allow Cecil to borrow the crystal.
Cecil takes it to the Tower of Zot and they fight their way past the Magus Sisters to the top. Cecil gives Golbez the crystal, but Golbez refuses to return Rosa. Tellah casts the Meteor spell to avenge Anna, and while it does not kill Golbez, it does break his hold on Kain. Golbez cannot bring himself to kill Cecil and retreats. Tellah dies from overexertion brought forth by the casting of the spell, lamenting that he died for revenge before asking Cecil to avenge his death. They free Rosa, and she and Cecil share a kiss before welcoming the remorseful Kain back into the party. They defeat Barbariccia, Archfiend of Wind, and Rosa teleports them back to Baron as the tower collapses.
Kain explains Golbez is seeking the four Dark Crystals to open the "way to the moon". Using the Magma Stone that Golbez gave Kain, the party opens the way underground in Agart. The Enterprise ends up in the middle of a battle between the dwarves and the Red Wings and crashes near the Dwarven Castle. Although King Giott says his crystal is safe, the party finds the Calcabrina dolls belonging to Princess Luca are possessed. After they defeat the dolls, Golbez arrives and incapacitates them. Before he can finish them off, Rydia returns and saves them, having aged to adulthood and gained new summons in the Feymarch, the realm of the Eidolons where time flows faster. Golbez uses the last of his strength to steal the crystal and escape.
King Giott tells the party to go to the Tower of Babil and recover the seven stolen crystals with the help of the dwarven tanks. Cecil and company best the evil Dr. Lugae, but are unable to stop the tower's cannons from shelling the dwarves. Yang forces them out of the control room and sacrifices himself to destroy the artillery. Golbez attempts to kill the rest of them on the way out of the tower by removing a bridge, but Cid saves them with the Enterprise. They come under attack by the Red Wings, so Cid flies back to the Agart entrance and jumps off to collapse it by hand-detonating a bomb.
A short stop in Baron has Cid's engineers upgrade the airship so it can carry the hovercraft. The party uses it to reach the Eblan Cave after finding Eblan itself deserted. They meet Prince Edge Geraldine as he fails to defeat Rubicante, the Archfiend of Fire. Although he is testy at first, he joins them. They enter Babil via its cave entrance and find Edge's parents, the King and Queen of Eblan, but Lugae has turned them into monsters. They regain their senses halfway through the fight and kill themselves, to Edge's sorrow. Although Rubicante claims to have no hand in it, Edge swears revenge and the party attacks. Rubicante retreats and the party finds the crystals in another room, but a trapdoor opens and they fall into another airship. They seize it and name it the Falcon. Cid, who was rescued by the dwarves, adds mythril plating so it can fly over lava. King Giott gives them the key to the Sealed Cave so they can save the last crystal.
As soon as the party takes the crystal, Golbez reasserts control over Kain and forces him to steal it. Giott claims the only way to stop Golbez now would be with the legendary Lunar Whale. Cid attaches a drill to the Falcon so the party can return to the surface. Along the way they visit the Feymarch, land of Eidolons, and gain the powers of Leviathan and Asura. They find Yang recovering in the Sylph Cave and revive him with a frying pan given to them by his wife Sheila. On the surfaces, they find King Baron's spirit as the Eidolon Odin in Baron Castle.
The party goes to Mysidia, where the Elder gathers everyone at the Tower of Prayers to summon the Lunar Whale, an airship capable of reaching the Red Moon, from the ocean. Cecil and the others take it and leave Earth.
They meet Fusoya in the Crystal Palace; he is a Lunarian charged with watching over the rest of his race as they sleep. He explains that they once tried to colonize the Blue Planet, but decided to live on the moon until they could live in peace with humans. One Lunarian named Zemus disagreed and wanted to take the planet; though he was restrained, he was still able to manipulate people on the Blue Planet, such as Golbez. Zemus's goal is to activate the Giant of Babil to wipe out the world's population. Fusoya reveals that his younger brother, Kluya, went to the Blue Planet to teach the natives and fathered two sons, one of whom is Cecil.
Accompanied by Fusoya, who can neutralize the Giant of Babil's force field, Cecil returns to the Blue Planet to find the giant revived. The entire world—including former party members Edward, Cid, Yang, Palom and Porom—participates in the counterattack. After using Cid's airship to break into the giant, the party defeats the Archfiends one after the other, and destroys the CPU. When the giant stops, Golbez confronts the party. Fusoya breaks Zemus's mind control, and Golbez remembers that he is Cecil's older brother. After humans killed Kluya and Cecilia died in childbirth, Zemus manipulated the vulnerable child Theodor and turned him into Golbez. He and Fusoya leave the others for the moon, intending to defeat Zemus.
Kain, now completely freed, returns and helps the others escape from the collapsing giant. Although he feels unworthy for his part in Zemus's schemes, Cecil and Rosa assure him that he is forgiven. As they prepare to depart for the moon on the Lunar Whale, Cecil insists that Rosa and Rydia stay behind. The two reveal themselves once the ship reaches the moon and remind Cecil that they have as much a stake in the battle as he does, and that their skills are essential to the party.
The Crystals of the Moon transport the party to the Lunar Subterrane, which they traverse to the Lunar Core where they find Fusoya and Golbez. Cecil and the others watch Golbez and Fusoya defeat Zemus, but his death unleashes a more powerful being named Zeromus, the embodiment of Zemus's reborn spirit and hatred. Zeromus defeats Golbez and Fusoya, then attacks the rest of Cecil's party. Their former allies gather at the Tower of Prayers to restore them to life, and Cecil uses a crystal given to him by Golbez to make Zeromus vulnerable.
After Zeromus's defeat, Fusoya returns to sleep with the rest of his people. Golbez, feeling that he cannot return to the Earth after what he has done, and being half Lunarian himself, goes with him. Cecil forgives him and calls him brother. The moon heads off into space, and the party members return to their homes, several to rebuild them. Edward becomes the king of Damcyan, Edge becomes the king of Eblan, and Yang and Sheila become the new king and queen of Fabul. Kain goes to Mount Ordeals to train, vowing not to return to Baron until he has proven himself worthy. Everyone but Kain attends Cecil and Rosa's wedding and coronation as king and queen of Baron.