General Donald Morden, the antagonist from the first game is back once more with his army, bent on taking over the world. It is up to the Peregrine Falcon squad, who are now joined by two new characters: Eri Kasamoto and Fiolina Germi of the Sparrows Intelligence Unit, to save the day. As the levels unfold, it turns out that Morden has allied with Martians to help facilitate his plans. Eventually the tables are turned when Morden comes under attack and is betrayed by his Martian allies. An ad-hoc alliance is formed between the Peregrine Falcon squad and General Morden's army to combat the greater alien threat.