It's late in the year UC 0079, in the last weeks of the One Year War. After the destruction of the Earth Federation's military power and the Zeon conquest of half the Earth's surface, the Federation has finally caught up with the Zeon technology and begun rebuilding its forces for a counterattack. Nine months after the start of the war, the Federation has begun trial production of its own mobile suits and organized fighting teams to test them in battle.

Earth Orbit

A transport ship is en route to Earth, transferring Federal Forces soldiers from the space colonies to Earth. Among the ship's passengers are young officer Shiro Amada, and fresh-faced recruit Michel Ninorich. Their attention drawn by a nearby signal flare, the passengers spot a Federation mobile suit engaged in a running battle with a Zeon prototype. The foolhardy Shiro enters the fray in a Ball, a crude space pod intended for manual labor, enabling the Federation pilot to escape. Shiro's Ball and the Zeon prototype are both destroyed in the skirmish, and both combatants are forced to seek refuge inside a wrecked battleship. Putting aside their differences, Shiro and the Zeon test pilot, a young woman named Aina Sahalin, team up to create a distress signal and are each rescued by friendly forces.

Southeast Asia

Arriving on Earth, Shiro takes command of the Kojima Battalion's 08th Mobile Suit Team, part of a test corps stationed in Southeast Asia. In addition to Shiro, the team's pilots include veteran Karen Joshua and grim ace Terry Sanders Jr., the Federation pilot Shiro rescued in Earth orbit; all three are equipped with a ground combat version of the Gundam. Michel and the happy-go-lucky Eledore Massis are assigned to operate the team's support hovertruck. Almost immediately, the 08th MS Team are dispatched to aid another team in a nearby skirmish. In the ensuing night battle, Shiro becomes lost and spends the next day wandering through the jungle. On his wanderings, he comes across a young girl bathing, and is rewarded for his peeping with a few rounds of hot lead.

For its next mission, the 08th MS Team is sent to capture a Zeon-occupied village. Shiro orders his pilots to split up and attack the enemy from two sides, and is promptly waylaid by guerillas on his way to the rendezvous. It turns out that these guerillas are the associates of Kiki Rosita, the girl he encountered earlier. Bargaining with his captors, Shiro enlists their aid in attacking the Zeon encampment in return for vital food and medicine.

Flying Nightmare

Elsewhere in Southeast Asia, a Zeon scientist named Ginias Sahalin has completed an ambitious weapons development project. In his secret mountain base, Ginias has developed the powerful mobile armor Apsalus, capable of atmospheric flight and armed with a devastating mega particle cannon. Its test pilot is his sister Aina, the same Zeon pilot whom Shiro encountered in space. During a test flight, the Apsalus is intercepted by the 08th MS Team. Shiro and his team succeed in crippling the mobile armor, forcing it make an emergency landing nearby.

Shortly thereafter, amateur musician Eledore receives word that one of his songs has been picked up for a major-label release. He commandeers Michel to help him celebrate, and they sneak off the base to a nearby village. Unfortunately, they've stumbled upon the very same village where the Apsalus has crash-landed, now occupied by Zeon soldiers frantically trying to repair the damaged mobile armor. Briefly captured, the two escape, but Eledore is badly wounded in the process.

With the Apsalus airborne once more, the 08th MS Team is sent to stake out its desert testing ground. After nearly a week of tense waiting, they finally sight the mobile armor and spring their trap. Though the Apsalus escapes, Shiro is able to cling to it with his Gundam, and the overloaded mobile armor eventually crashes in the snowy peaks of the Himalayas. Once again, Shiro and Aina are forced to cooperate to survive, but their growing closeness is interrupted by the arrival of both sides' rescue parties. To protect her brother's creation from capture, Aina triggers the Apsalus's self-destruct system and takes out a Federal Forces transport plane, then abandons Shiro in the snow.

Escape from Odessa

At the same time, the Federation is concluding its Operation Odessa campaign in Eastern Europe. Some of the defeated Zeons escape into space, but cocky general Yuri Kellarny and his men are left behind. Yuri decides to lead the surviving forces eastward to his friend Ginias's research base so that they can use its power source, the space cruiser Kerguelen, to return to space. He orders Ginias to halt his precious research project and prepare for the fugitives' arrival.

Meanwhile, another party of Zeon stragglers makes its way through the jungles of Southeast Asia. Stumbling upon Kiki's village, this trio of war-weary mobile suit pilots hold the guerillas hostage to obtain food. Shiro, who has been confined to base as a suspected spy due to his relationship with Aina, defies orders and leads the 08th MS Team in a dangerous rescue mission. Despite Shiro's efforts to resolve the situation without bloodshed, the guerillas are all but wiped out, and he is forced to kill a panicking Zeon pilot.

Mountain Siege

Having determined that the Apsalus project poses a dire threat, the Federal Forces direct the Kojima Battalion to locate and destroy Ginias's secret base. While searching the area, the 08th MS Team encounters Yuri Kellarny's convoy of carrier planes. A handful of Yuri's men manage to hold off Shiro and friends long enough for their fellows to reach Ginias's base. Yuri waits at the base's entrance for his loyal underlings to return, then finds that Ginias has locked him out to prevent him from meddling in the all-important Apsalus project. Ginias sets off a bomb to eliminate Yuri, which has the unfortunate side effect of giving away his secret base's location.

With the target located, the entire Kojima Battalion is mobilized to lay siege to the base. Ginias's engineers scramble to complete a new, more lethal incarnation of the Apsalus, while the rest of the base's personnel prepare to escape in the Kerguelen. Zeon ace Norris Packard, the Sahalin family's loyal retainer, sets out to eliminate the Federal Forces' artillery mobile suits and clear a safe path for the Kerguelen to launch. After a fierce battle with the 08th MS Team, Norris succeeds in wiping out the artillery battery at the cost of his own life.

Final Attack of the Apsalus

As Shiro and his team regroup, they see a horrifying sight rising over the ruins of the mountain base: a recreated, revised Apsalus, with Ginias and Aina at its controls. After wiping out a large portion of the massed Federal Forces, Aina offers to hold her fire if the enemy allows the Kerguelen to escape. But no sooner has the Kerguelen launched than Ginias opens fire again, and the escaping ship is shot down by Federation snipers.

Tired of his sister's soft-heartedness, Ginias shoots her. Aina topples out of the Apsalus's cockpit, only to be caught by Shiro's Gundam. As Ginias draws a bead on the two lovers with the Apsalus's cannon, Federation snipers shoot the mobile armor full of holes and it crashes to the ground. Even as the Federal Forces rush to capture the fallen Apsalus, Shiro races to destroy it, crushing the mobile armor's cockpit just as it opens fire for the last time. The Federation command post is vaporized by the Apsalus's parting shot, the mobile armor explodes, and Shiro and Aina disappear in the blast...

Epilogue

Months later, the war has ended in victory for the Earth Federation. Michel Ninorich leaves the Federal Forces and, accompanied by Kiki Rosita, sets off in search of his missing comrades. Their wandering leads Michel and Kiki to a group of children who bear the names of Shiro, Aina, and the rest of the 08th MS Team. These children turn out to be refugees from Zeon's newtype research institute; since their names and memories had been stolen from them, two kindly strangers gave them new identities. Now certain that their friends are alive, Michel and Kiki press on and at last find Shiro and Aina, living together in peace.