Two years after the events of the original game, Sergeant James Heller, after returning from touring in Iraq, discovers his wife and daughter to be declared dead, causing him to rejoin the military in the fight for NYZ against the Blacklight virus. Heller is briefed on the previous outbreaks in Idaho in the '60s and in NYZ in the events of the first game. He later finds Mercer and begins chasing him.

Pursuing Mercer for vengeance, Heller is infected by Mercer with a strain that imbues him with similar superhuman abilities. After blacking out, Heller awakens in a Yellow Zone lab where Gentek scientist Dr. Anton Koenig and Blackwatch Col. Douglas Rooks are experimenting on him. Heller escapes from the Gentek base, when Mercer confronts him and claims Gentek and Blackwatch are responsible for recreating and cultivating the Blacklight virus, making them responsible for the second infection and the deaths of Heller's family. Revealing his plans to take down Gentek and Blackwatch, Mercer offers a truce to Heller. Unsure of Mercer's intentions Heller goes to his local pastor, Father Luis Guerra, for advice and help.

Using information supplied by Guerra, Heller hacks into Blacknet Terminals to find out about and sabotage a number of their operations. Gradually consuming his way through Blackwatch, Heller eventually finds and confronts Koenig, who claims to be on his side and reveals Blackwatch's super-soldier program, codenamed "Orion". Heller prevents Project: Orion's progress by killing a super-soldier who was injected with his DNA. After consuming one of the head scientists, Heller discovers that Koenig was observing him in order to find his weaknesses. Enraged at Koenig's betrayal, Heller tracks him down only to discover that he has powers similar to he and Mercer, and is one of several "Evolved" agents planted in Gentek and Blackwatch by Mercer. After defeating and consuming the doctor, Mercer reveals to Heller that he intends to recruit him in an attempt to control NYZ. His doubts growing, Guerra then shows Heller a video tape of Mercer releasing the virus for the second time in Penn Station, the same place Mercer originally released and contracted the virus.

Enraged at Mercer's deception, Heller sets off to the Green Zone to hunt down Mercer's henchmen, including an Evolved agent in Gentek named Sabrina Galloway; upon confronting Galloway, however, Heller reluctantly teams up with her when she reveals she can help him take down Mercer. With Galloway's help, Heller soon finds that Mercer plans to infect the entire world through "Whitelight", a contaminated vaccine released by Gentek that actually serves to accelerate infection and evolution rather than prevent it.

Frustrated with Heller sabotaging his plans, Mercer kills Father Guerra; upon finding his corpse, however, a grieving Heller uses Guerra's phone to reach Athena, Guerra's contact who is revealed to be Dana Mercer. Dana explains that Heller's daughter, Maya, is still alive, prompting Heller to head for the Red Zone to take down Mercer and save Maya. After preventing Blackwatch's second attempt to level Manhattan Island, Rooks helps Heller reach his daughter, only for Galloway to betray him and take Maya to Mercer. Upon confronting Mercer, he reveals that he plans to solve international conflicts and world problems by infecting the entire human race, effectively creating a Superorganism with Maya at the center. After Mercer absorbs Galloway and the remaining Evolved, the two engage in a bloody duel, only for James to emerge victorious and to kill and consume Mercer.

Subsequently, Heller wipes out the infected in NYZ along with most of the Blacklight Virus; then using Mercer's absorbed memories, Heller locates and frees Maya and Dana from a vault. The story then ends with the three overlooking New York before Dana questions what to do next.