The story beggins when Naruto returns from almost 3 years of training with Jiraiya. Thinking than now he is strong enough Naruto hopes that this time he's going to be able to defeat and ultimately bring Sasuke back to Leaf Village.
A trigger happy witch wakes up with no recollection of who or where she is, when a flashback takes her 500 years back in time and leads her on a quest to retrieve artifacts known as "Eyes of the World".
After the G Corporation launches a full-scale attack on Heihachi and Kazuya Mishima, Kazuya betrays his father and escapes. When the fifth King of the Iron Fist tournament is announced, both Kazuya and his son Jin enter in.
In an alternative universe where Superman establishes a new world order under his iron fist, Batman and other heroes must fight back against Superman and those that have pledged their allegiance to his dictatorship.
The game follows the events of the previous game when all the five Kages gather to the land of iron to discuss how to deal with the Akatsuki. But the summit is soon attacked by Sasuke Uchiha who is after Danzo the new Hokage.