The game begins with Nowe a boy raised by a dragon, joining the Knights of the Seal, whose purpose is to protect the keys holding the red dragon's seal in place, which prevents the end of the world. Nowe begins to wonder about the ethics of the Knights when he discovers that the keys are powered by the life force of some of the land's citizens. His faith is further shaken when the general, General Gismor, tries to poison him, then reveals that he poisoned his predecessor, General Oror, Nowe's adoptive father. Nowe's anger prompts him to attack Gismor, severing his arm, before fleeing from him and the other Knights. Eris, a friend of Nowe's within the Knights, sets off to convince Nowe to return. While on the run, he is accompanied by his dragon named Legna. They soon meet Manah, a sorceress on a quest to free the people from the rule of the Knights. Nowe decides to join her. During their travels, they meet Urick, an ex-Knight who trained under General Oror. After some time, they arrive at the District of Shining Life, which Caim, protagonist of the first game, is already assaulting. Nowe then discovers that Urick is the guardian of the district. Because he has become close friends with Urick, Nowe attempts to save Urick's life by challenging Caim himself. Urick, however, is still mortally wounded during the battle; Urick manages to push Caim into a chasm before he dies. With Urick's death, the key in the district is destroyed. Nowe repeats this for the other keys, killing their guardians to destroy their keys. The last key, Nowe discovers, is guarded by General Gismor, who Nowe discovers is actually a phantom of darkness. Eris is stabbed and thought to be killed at this time, as Gismor uses her as a human shield. Nowe defeats Gismor, but before he can strike him down, Gismor destroys his key so Nowe can't have the pleasure of killing him. With the destruction of the keys, Angelus, the red dragon of the seal, is released. She begins a rampage across the land, having been driven mad by the tortures of being the seal. Nowe receives a note from Caim saying to slay Angelus because he just wanted to see her one more time. Nowe and Legna then battle with Angelus and slay her. With her death, the world reverts to the state it was in during the first game. Legna carries Nowe to a repository of knowledge created by the holy dragons, where he learns of a prophecy that he will end the war between the dragons and the gods. At this time, Eris catches up to Nowe and joins him. Legna then carries Nowe to an artifact called the Bone Casket. Legna says that Nowe must enter the casket to fulfill the prophecy. The player is then given the option of having Nowe enter the casket or refuse to do so. If Nowe refuses, Legna attacks him, forcing Nowe to slay Legna. Eris reveals herself to be a goddess, and becomes the seal to restore order to the world. If Nowe agrees to climb into the casket, the casket attacks Nowe, forcing him to battle it. During the battle, the casket merges with Manah, forcing Nowe to kill both the casket and Manah. At this point, Nowe, Legna and Eris resolve to join the dragons in their war with the gods. An alternate ending exists in which the casket does not merge with Manah, because she is able to subdue it. Legna then reveals that he only cared for Nowe so he could use him as a weapon, prompting the battle between Nowe and Legna. With Legna's death, both the gods and the dragons fade away, negating the need for a seal.