The executive Beth Emhoff returns from a business trip to Hong Kong with a stop over at the Chicago airport, where she has sex with her former lover. Beth feels ill but she believes that the problem is jet leg. She travels back home to Minneapolis and spreads the virus to her son Clark and her husband Mitch. When Beth and Clark die, Mitch goes in quarantine where the doctors realize that he is immune to the mysterious virus. Meanwhile in Hong Kong, London and in a small province, people have the same disease. The American CDC and the World Health Organization give their best effort researching the virus that is spreading in a geometric progression. The outbreak is threatening the worldwide population of annihilation, unless a vaccine is well-succeeded. The scientists begin a fight against time.

At a museum in Boston, Rugal Bernstein steals three relics: The Kagura Mirror, the Yagami Necklace and the Kusanagi Sword. He uses them to disappear into a dimensional portal to awaken the mythical entity known as the Orochi, which would grant him limitless powers. However, the sword is revealed to be a fake - thus, Rugal's quest is delayed. Mai Shiranui is told by an injured Chizuru Kagura that the whereabouts of the real sword are with Saisyu Kusanagi, who is housed at a mental institution. She is also warned that she alone must defeat Rugal and her boyfriend Iori Yagami should not be involved. At the institution, Mai meets a catatonic Saisyu and his son Kyo, but Iori's presence suddenly breaks Saisyu's catatonic state, and the elder Kusanagi threatens to kill Iori before losing consciousness and dying. Meanwhile, at another hospital where Chizuru is recovering from her injury, she is informed by her colleague Scott that Rugal has altered the King of Fighters database and issued challenges to all fighters around the world. CIA agent Terry Bogard enters Chizuru's room, demanding for information on Rugal's whereabouts and the tournament. She tells him of the different dimensions that exist, but he does not believe a word. Chizuru then tells Terry to go to Seattle and ask Mai, who is actually an undercover operative sent by the CIA to infiltrate Chizuru's organization a year ago. At a cemetery in Seattle, where Saisyu is buried, Kyo and Iori confront each other once again. Iori explains that both Kusanagi and Yagami clans were destined to be enemies. Mai hitches a ride with Kyo to his home, where she explains to him that she is looking for the Kusanagi Sword. Kyo tells her that centuries ago, according to family folklore, a Yagami ancestor attempted to release the Orochi, but it consumed him with murderous rage. Kyo's ancestor killed the Yagami and returned the Orochi into its world. Mai tells Kyo that Rugal is out to unleash the Orochi once again. Kyo, meanwhile, wants to confront Rugal, who destroyed his father's mental state. At a hotel, Mai and Kyo meet up with Iori and Terry. It is revealed that Rugal is using the tournament dimension to merge it with the real world. After Mai blows her cover in front of Kyo, Iori puts on his Bluetooth headset and enters the tournament dimension to confront Rugal. There, he defeats Rugal's servants Mature and Vice in combat, only to have his mind consumed by the Orochi. The next day, Kyo is lured into the tournament dimension, where he first fights Rugal and loses, but is allowed to live as a warning. This prompts him to bring out his ancestral sword and join Chizuru and Terry into the tournament after Mai is dragged in by Rugal. When the four meet up, they are separated into different dimensions, with Kyo fighting Rugal and Mai and Terry facing Mature and Vice. In the middle of a sword fight, Rugal is about to decapitate Kyo when Iori suddenly appears and intervenes. Here, Rugal reveals to Kyo that several years back, he battled Saisyu, Chizuru and Iori over control of the Orochi. During that fight, Iori allowed the Orochi to take over his body, defeating Rugal, but also destroying Saisyu's mental state by bashing his head against a wooden barrier several times. This leads to a fight between Kyo and Iori. Kyo slashes Iori in the back, releasing the Orochi from his body. Disappointed by the outcome of the fight, Rugal sends Kyo, Iori and Mai into another dimension to face them with his full potential. Chizuru and her multiple clones appear, revealing that she has found the mirror and the necklace. The heroes fail in their first attempt to combine the relics and trap Rugal, with Chizuru mortally wounded. Mai takes her place as the mirror holder, but as she, Kyo and Iori corner Rugal, they are once again overcome by his powers. Rugal destroys Kyo's sword, but as he is about to finish him off with a fireball, Kyo magically generates a new sword to block it. He then throws the sword and destroys Rugal. Back in the real world, Scott places a lantern on the ocean in memory of Chizuru. Kyo decides to keep the family tradition by continuing with the tournament. He reflects on his late father's teachings while Iori stares at him from the other side of the pier.