The film begins with a scene in an area surrounded by rock formations. A red, lion-like beast known as Red XIII (Liam O'Brien) can be seen with two younger members of the same species running along the cliff. Eventually, the three reach a cliffside, which they swiftly climb. The camera pans around to show the ruined city of Midgar, overrun with forests and vegetation, as Red XIII roars in the city's direction.
The scene fades to a shot of a man in a black outfit with silvery hair wheeling another man in a wheelchair out of an elevator. The man in the wheelchair is covered in a white cloth, obscuring his identity. The two walk to the edge of the building, as they discuss a new disease that has struck the city of Edge: Geostigma. It is revealed that the man in the wheelchair is infected with Geostigma, due to the black bruise on his wrist area.
The scene switches again to a shot of a mountain covered in snow. The Turks Tseng (Ryun Yu) and Elena (Bettina Bush), are heard talking to each other on a radio. A helicopter is then shown, its pilot being another Turk, Reno (Quinton Flynn). The helicopter then descends into what appears to be the Northern Crater, before disappearing in a snowstorm. Multiple gunshots are then heard on the radio, as Tseng and Elena cry out, appearing to have been shot. Elena tells Reno to get out of the crater, and the helicopter can then be seen exiting the crater and flying away.
The scene fades into a scene in which Marlene Wallace (Grace Rolek) narrates a short summary of the events in Final Fantasy VII, as well as the current state of the city Edge. In summary, the Shinra Electric Power Company used the power of an energy source known as mako to drain the planet of a vital soul known as the Lifestream. Shinra also had a unique section of warriors known as SOLDIER. All SOLDIERs were to be injected with cells from a calamity known as JENOVA, which gave them unique and enhanced abilities. One unique SOLDIER was Sephiroth (George Newbern), regarded for his exceptional ability to fight with a six-feet-long katana. Sephiroth eventually found out about JENOVA, who he believed to be his "mother". Eventually, Sephiroth turned insane, burning down the village of Nibelheim and vowing to take revenge on Shinra and even the Planet itself. Sephiroth managed to obtain the Black Materia, which enabled him to summon an incredibly powerful magic known as Meteor, which was to strike the Planet. Another group of warriors, led by Cloud Strife (Steve Burton), attempted to stop Meteor by traveling to the center of the Planet to unlock Holy, the counterpart of Meteor. However, even Holy was not powerful enough, and the Planet was forced to call the Lifestream to stop Meteor. Meteor was destroyed, along with the city of Midgar, home of the Shinra corporation, and Sephiroth was killed by Cloud.
The city of Edge built beside Midgar is shown, as well as the Midgar memorial, located in the center of the city plaza. Several of the city's children are infected with Geostigma, targeted because of their low immune systems. The inside of the bar "Seventh Heaven" is shown, where an orphan named Denzel (Benjamin Bryan) is shown lying on a bed, infected with Geostigma on his forehead. Tifa Lockhart (Rachael Leigh Cook) is shown answering a phone call for the absent Cloud Strife, saying that she "knows" the caller.
The scene shifts again to an empty wasteland, where the Buster Sword is shown stabbed into a cliff, with a wolf behind it. A group of three silver-haired men known as the "Remnants of Sephiroth" riding motorcycles approach the cliffside overlooking Midgar and Edge, beside the Buster Sword. Their names are revealed to be Yazoo (Dave Wittenberg), Loz (Fred Tatasciore), and Kadaj (Steve Staley), Kadaj appearing to be their leader and also the man shown in the opening scene. The three discuss finding their "big brother" (Cloud) and their "mother" (JENOVA).
The protagonist Cloud Strife is shown riding on a motorbike in the wasteland before he is ambushed by Yazoo and Loz. The two summon Shadow Creepers to attack Cloud as well as attack him themselves. Cloud reveals that his motorbike has hidden compartments that hold his various swords. However, as they fight, Cloud is distracted by a pain in his left arm. It is later revealed that Cloud has contracted Geostigma. Cloud is overwhelmed, but Kadaj calls Yazoo and Loz back before Cloud is finished off.
Cloud then rides into the outskirts of Edge to find the mysterious caller. As he enters the building, Reno attempts to attack him. Cloud easily blocks the attack with one of his swords and locks Reno outside the building. The man in the wheelchair enters the room, accompanied by another Turk: Rude (Crispin Freeman). The man is then revealed to be Rufus Shinra, who was the president of the Shinra company before it was destroyed. Rufus reveals that the Turks were sent to the Northern Crater to look for remains of Sephiroth, but were ambushed by the Remnants. Shinra's plan is to find the remaining JENOVA cells before the Remnants do, or there is a chance that Sephiroth may be reborn. Geostigma is also suspected to have been caused by Sephiroth's soul, acting through the Remnants and his soul living in the Lifestream. Rufus offers Cloud the chance to help fix Shinra's mistakes and restore the Planet to what it was before Meteor, and also for protection from Kadaj's gang. Cloud however, refuses.
There is a short scene of Tifa and Marlene visiting the church in the Sector Seven slums of Midgar, where Aerith Gainsborough (Mena Suvari) used to be. It is revealed that Cloud is now living in the Church. The two stay in the church and wait for Cloud to arrive.
Kadaj has managed to infiltrate the building and defeat Reno and Rude alone. Rufus states that Kadaj and the Remnants are looking for "an object", which he says fell from the Turks helicopter as they fled the Northern Cave. Kadaj then displays the ID cards of Tseng and Elena, smeared with blood. Kadaj then explains the Reunion, which he says is an event in which his "brothers and sisters" will join with him, and they will take revenge on the Planet, and that the Geostigma are "invitations". He mentions that the Remnants can never be "whole" unless they receive JENOVA's cells. Kadaj then shows proof that he is in fact a reincarnation of Sephiroth by using Rufus's memories.
Cloud is shown on the cliff with the Buster Sword. A flashback of the events in Crisis Core: Final Fantasy VII are then shown.
Loz enters the church in the slums, saying that he is looking for "mother". When Tifa says that there is no one there, Loz attempts to take Marlene with him. Tifa retaliates, fighting Loz while displaying an impressive array of physical attacks. However, even after the fight, Loz remains unfazed and uses a device on his arm to disarm Tifa and to knock her unconscious.
A girl living in Edge meets Denzel, and mentions that a group of people are going to "fix" the children affected by Geostigma. All the children, including Denzel, board the back of a pickup truck as Yazoo is revealed to be the leader of the operation.
Cloud then enters the church and notices the unconscious Tifa. Tifa awakens and tells Cloud that Loz took Marlene before she drops unconscious again. Cloud then notices a searing pain in his arm as black slime drips from the Geostigma bruise and onto the flowers in the church. A quick sequence of images are shown, several of them with Sephiroth in them. The pain subdues Cloud and knocks him unconscious as well.
Cloud wakes up in an inn, rescued by Reno and Rude. The two tell Cloud that the Remnants have kidnapped the children and taken them to an unknown location. When asked if he cares or not, Cloud does not reply.
Meanwhile, the Forgotten City, Kadaj inspects a chest taken from the church by Loz. The chest is revealed to contain Materia linked with the power of the Lifestream. Kadaj takes the Materia, saying that "those powers will now be theirs".
Tifa wakes up in the inn and attempts to convince Cloud to fight the Geostigma together with the children, instead of just giving up. Cloud reacts by saying that he can no longer help anyone, overridden with guilt. Reno and Rude then enter the room and reveal the location of Kadaj: the Forgotten City. Cloud sets off to find the children.
Kadaj can be seen overlooking a small river with the children waiting on the other side. Kadaj tells the children that their "mother" has given them the gift to fight against the Planet. He says that they are destined to inherit JENOVA's legacy through the Lifestream. However, the Planet does not approve, and is fighting back through Geostigma. Kadaj now tells the children that he will heal them, and steps into the river, tainting it with JENOVA's presence. The children are told to then drink the water, and they comply, including Denzel.
As he rides through the Forgotten Forest, the deceased Aerith uses the Lifestream to contact him. She asks Cloud why he came to the Forest. Cloud responds by saying that he just wants to be forgiven. When Aerith asks by who, the scene ends and Cloud returns to riding his motorbike through the Forest. Gunshots suddenly erupt as bullet fly past Cloud. In front of him, he notices the Remnants, firing at him from a distance. With the added power of the Materia, the Remnants are more powerful. Kadaj signals, and the children drop down from the trees above, now brainwashed and under Kadaj's control. Cloud is forced to stop to avoid hitting the children, and falls off the motorbike. Cloud and the Remnants then fight in the Forest. Cloud appears to be overwhelmed from the very start, outnumbered three to one. With their Remnant synchronization, the three men quickly subdue Cloud. However, Vincent Valentine (Steve Blum), an old friend of Cloud, appears and saves Cloud, taking him away to another part of the Forest. Cloud drops his cell phone in the process.
Vincent explains that the Geostigma is the result of an infection brought about by the soul of JENOVA attacking the bodies of the children through the Lifestream. If the Remnants managed to obtain JENOVA's cells, they could recreate Sephiroth. Marlene appears from the bushes, telling Cloud that she managed to escape from Kadaj while they were fighting. Cloud tells Vincent to take Marlene back to Edge while he goes to talk to Rufus, but Vincent denies. Marlene becomes fed up with Cloud, asking why he never cared about them. Cloud reflects on his past conversations with Tifa on the same topic, realizing that fighting alone isn't going to get anywhere. Cloud then agrees to take Marlene to Edge.
The next scene shows Cloud's cell phone falling to the bottom of a small pond, while the numerous messages from his friends are being played. As the phone reaches the bottom, a message from Aerith plays, saying that she never blamed him for anything. The screen then turns black.
Meanwhile in Edge, Yazoo and Loz have surrounded the Midgar monument with the still-brainwashed children, watching as the citizens protest. Annoyed, Yazoo summons the Shadow Creepers to drive away the citizens. In the chaos, Tifa finds the brainwashed Denzel standing in the circle, who does not respond to her. On the other side of the circle, Yazoo and Loz begin to tear down the monument, believing that JENOVA's cells are hidden within. Reno and Rude show up, ready for battle. Yazoo taunts them about not being trusted by Rufus, and Reno responds by attacking.
The scene flashes to Kadaj conversing with Rufus on the same building as in the opening scene. Kadaj explains that Sephiroth is returning, and it will not be long before the reunion arrives. He also explains that he must be the one to make the Planet accept JENOVA, in order to make his "mother" happy. However, it is also mentioned that Kadaj may be slightly jealous of Sephiroth for his relationship with JENOVA. Kadaj then uses the new Materia to fire a Summon into the sky, summoning Bahamut SIN, which he believes will end all the chaos.
As Bahamut SIN approaches the Midgar monument, the crowd begins to retreat. Tifa continues to talk to Denzel, but he still does not respond. Reno and Rude notice the giant dragon and attempt to save the children by carrying them away from the monument. However, Bahamut SIN uses an blue energy blast to destroy the monument, causing an explosion that knocks Reno and Rude to the ground. Yazoo and Loz continue to fight Reno and Rude. During the fight, Yazoo mentions that all they want "is to be with mother". The two Remnants overpower the Turks quickly. They continue to fight.
Denzel, whose own mind was restored by the blast, wakes up from unconsciousness and sees Tifa still unconscious. In an angry rage, he charges towards Bahamut SIN, however, Barret Wallace (Beau Billingslea), shows up behind him and stops him, while using his machine-gun arm to fire at Bahamut SIN. Other friends of Cloud and Tifa show up as well, including Yuffie Kisaragi (Christy Carlson Romano), Cid Highwind (Chris Edgerly),Vincent Valentine, Red XIII, and Cait Sith (Greg Ellis). Cloud also rides in on his motorbike, saying that he feels "lighter".
As the group fights Bahamut SIN, Cloud enters the battle and fights the dragon himself, using two swords. All of his attacks appear to have no effect, until Cloud uses his Braver limit to knock the dragon down to the ground. However, Bahamut SIN begins to charge a massive blue energy blast and flies up high into the sky.
Meanwhile, Kadaj is still talking with Rufus on the building. Rufus then stands up, revealing that he is not crippled at all, and removes the white cloth, revealing his true identity to Kadaj. Kadaj stares in complete shock at the black box in Rufus's hand. Rufus was in possession of the JENOVA cells all along, which he quickly tosses over the edge of the building, saying "A good son would have known.". Kadaj screams in agony as he launches a blast at Rufus.
Cloud manages to reach the dragon's height with the help of his friends just as Bahamut releases the massive blast. Cloud enters the blast and attempts to reach the other side. The spirit of Aerith appears from the Lifestream and helps Cloud reach the other side of the blast and charge at Bahamut SIN. Cloud uses his Climhazzard limit to finish off the dragon as the blast crashes harmlessly into a construction area.
As Cloud lands, Kadaj launches an energy blast at Rufus, who intentionally falls off the building. Rufus then retrieves a gun from his pocket and begins to fire at Kadaj, who also jumps off the building. Kadaj manages to fall faster than Rufus, and desperately tries to retrieve the JENOVA cells before they hit the ground. However, one of Rufus's bullets hits the box, tearing it open and spilling several of the greenish cells. Elena and Tseng then appear and launch two nets through the air, which catch the falling Rufus. Kadaj safely lands in front of Yazoo, Loz, Reno, and Rude.
Kadaj then spots Cloud speeding towards them on his motorcycle. Him, Yazoo and Loz board their own motorcycles and take off towards the uncompleted highway just as Cloud follows them in a chase.
As Cloud desperately tries to catch up to Kadaj, Yazoo and Loz distract him by attacking. Eventually, Kadaj takes a ramp to the higher levels. Cloud tries to follow, but is cut off by Loz and is forced to stay on the lower levels. Cloud, Yazoo and Loz enter a sealed overpass, in which they attack Cloud brutally. Cloud however, manages to destroy Loz's motorcycle and both of their weapons, using two of his swords. Cloud speeds ahead as Loz boards Yazoo's motorcycle.
Reno and Rude take positions in front of the three as they set up explosives on the highway. Cloud drives past both of them, but Yazoo and Loz are caught in the gigantic explosion. The explosion propels Cloud to the higher levels and he engages Kadaj in battle. Eventually, the highway ends, and the two are sent flying into the ruins of Midgar.
Kadaj manages to lose Cloud in the ruins, and decides to stop in Aerith's church to examine the black box. Rufus's bullet tore a long crack in the side, and Kadaj peers through the hole and cries out in realizing that he has finally found his "mother". Cloud enters the church as Kadaj launches a blast at one of the pillars, knocking it down and using it as a ramp to ride to the higher floors. He launches another blast at Cloud, knocking him off his motorcycle. Kadaj prepares to finish him off, but Aerith uses the Great Gospel to call sacred water into the church, curing Cloud's Geostigma and causing Kadaj to flee, as the water harms JENOVA's cells.
Cloud follows the path where Kadaj fled, and eventually ends up in an open area in front of the ruined Shinra Headquarters, located in the heart of Midgar. Kadaj confronts Cloud, saying that "mother will tell me what to do next". Cloud responds by calling Kadaj a remnant, a puppet of JENOVA. Kadaj responds violently by attacking Cloud, saying that he was once a puppet too. The two fight among the ruins.
Eventually, the rest of Cloud's friends arrive via Cid's airship, the Sherra. Barret says that they should help Cloud, but Tifa says that the fight belongs to Cloud, and not to them. She also says that Cloud has recovered the strength that they had lost after the last battle with Sephiroth. The battle continues between Cloud and Kadaj.
Kadaj attempts a final attack, lunging at Cloud from above. Cloud uses the Finishing Touch limit to launch Kadaj into the air. Kadaj manages to hang onto the edge of a structure, but loses his sword in the process. Cloud approaches Kadaj, whose grip is slowly slipping. Kadaj tries a final attempt to stop Cloud by tossing the black box at him, which Cloud slashes. The box flies through the air, but has now opened. Kadaj launches himself upward and catches the box while falling down the valley. Kadaj retrieves the cells from within the box, saying that his reunion is finally here. Kadaj fuses with the cells as he continues to fall. Cloud jumps after him.
Kadaj somehow lands harmlessly, and Cloud brings down his sword. However, Cloud's sword has hit an invisible barrier, separating the sword from Kadaj, who has now fully transformed into Sephiroth. Sephiroth's long katana then appears, which is what blocked Cloud's attack. Sephiroth slashes Cloud, launching him upward through the air and onto a rooftop. Sephiroth jumps after him.
Sephiroth notices that Cloud's Geostigma is gone, and says that it is "too bad". He then tells Cloud that his only goal is to sail through the cosmos using the Planet as a vessel, just as JENOVA did long ago. Eventually, they will find a new planet, and will create a new future for humanity, leaving the old Planet in the hands of the people still on it. Cloud vows to stop him, and engages Sephiroth in a final battle.
Throughout the entire battle, Sephiroth appears to have the upper hand, blocking every attack that Cloud uses. Eventually, Sephiroth tells Cloud that he has found a "present" for him, and leads him to the ruined Shinra Headquarters again. As Sephiroth slashes Cloud downward, Cloud uses two of his swords as ledges to stay on the building. Sephiroth uses unknown strength to split the Shinra building in half, and collapses the half down towards the two of them. The two continue to fight in the debris of the falling building. Cloud eventually decides to flee the scene, fleeing to another building and almost collapsing in exhaustion. Sephiroth continues to attack relentlessly, launching Cloud against the side of a building and stabbing him in the shoulder, pinning him against the surface.
Sephiroth then tells Cloud to tell him what he cherishes most, so that he may take it away from him. Cloud calls upon his friend's memories and pulls out the sword, diving into the air and tells Sephiroth that he cherishes everything. Cloud then uses his new technique, the Omnislash Version 5, to defeat Sephiroth. Before Sephiroth fades, he tells Cloud that he will never be just a memory, and transforms back into the defeated Kadaj.
Kadaj attempts to attack Cloud again, but loses his strength and collapses. Aerith then calls out the Kadaj, telling him that everyone is waiting for him. Kadaj then joins the Lifestream, dissolving in a green stream. Sacred rain begins to fall from the sky, curing everybody in the city of Geostigma. However, as Cloud looks up to the sky, a bullet suddenly pierces his body, and he collapses. The camera shifts to expose the fading Yazoo, who fired the bullet. Loz is beside him, also fading away because of the rain. Using the last of his strength, Cloud charges at the two. Yazoo and Loz then overcharge their Materia, causing a massive explosion. Cloud's friends watch from the airship in horror as Cloud is caught in the blast and killed.
The scene fades to Cloud's body floating in the Lifestream, as the wolf representing Cloud's guilt, fades away. The voices of Aerith and Zack Fair (Rick Gomez), Cloud's old friend, are heard. Aerith decides that Cloud isn't ready to die yet, and revives him. Cloud wakes up in the church, where a pool of sacred water has collected. All of Cloud's friends are there, including several of the citizens of Edge, and all the children. Red XIII tells Cloud that Denzel is still infected with Geostigma, due to him being indoors during the Great Gospel. Tifa then brings Denzel, who is still scared because of his previous experience with "sacred water", to the pool. Cloud then pours the water over Denzel's head, curing his Geostigma. Everybody rejoices as Cloud looks at the entrance of the church, where the spirits of Aerith and Zack are seen. Before they leave, Aerith tells Cloud that everything is now alright. Cloud acknowledges, and says that he finally realizes that he is not alone.