The game starts with Hinawa visiting her father Alec, along with her two children, Lucas and Claus, when the Pigmask army mysteriously appears, manipulating the forest creatures. Upon returning home, Hinawa is killed by a reptilian creature called a Drago that had been made into a cyborg. Claus visits Flint before going to avenge her death. Claus is never found, and Flint spends most of his time searching for him and mourning the death of Hinawa. Duster goes with his father, Wess, to retrieve the Hummingbird's Egg from Osohe Castle. They meet Kumatora, and once they find the egg, they fall into a trap. Kumatora and Wess wash up on a sandbank, but Duster goes missing, losing his memory and becoming "Lucky" of the DCMC , a band that performs at "Club Titiboo", hiding the egg in the process. A man named Fassad forces a monkey called Salsa to work for him or else he will kill his girlfriend, using him to sell Happy Boxes to the Tazmily villagers. By this time, the Pigmasks take over Tazmily.
Three years later, Tazmily has been transformed into a totalitarian society, with a monetary system in place for the first time. Wess asks Lucas to find Duster, and he goes with Boney to Club Titiboo. Kumatora is disguised as a waitress, and the three of them convince Duster to come with them. They eventually find the egg, and destroy the generator of Thunder Tower. They are chased to the top by Fassad,who slips and falls off the tower. They try to escape by hanging from the ladder of a Pigmask ship, but are thrown off. Lucas and Boney awaken in a field of sunflowers, and see the ghost of his mother, following her off a cliff and onto a haystack. They awaken, being told by Alec that he was told by Hinawa in his dream to make a haystack. Ionia, one of the Magypsies, tells Lucas about the seven Needles, which seal off the gigantic "Dark Dragon" hidden under the island. Whether the world would be destroyed or created anew upon the Dragon's release depends on whether the one who pulls them is good or evil. As they search for the Needles, they encounter Fassad who has now been fitted with mechanical parts after his fall, as well as a Masked Man, who is encountered several times as he tries to pull the Needles.
They are invited to the anti-utopic New Pork City by Master Porky, and find Leder the bell-ringer who speaks for the first time.He tells Lucas that there once existed a world much different from Nowhere Islands. The world wound up destroyed by the humans inhabiting it. Before the end of the world, a white ship came to the Nowhere Islands in order to create a utopia under the Dragon's protection. They replaced the memories of the old world with the new one of Nowhere Islands to prevent them from destroying the islands as well. The Hummingbird Egg was created to store the old memories. Leder watched over the village as the only one who retained his memories, ringing a bell to keep their memories from reverting.He reveals that Porky discovered the islands by traveling through space and time, filling his city with people taken from other eras. He learned of the white ship and the Dragon from Locria, who betrayed the Magypsies. Since Porky could not pull the Needles, he took control of someone who could. Fassad later battles them, and is defeated for the last time. They later discover that Fassad is the final Magypsy, Locria. They meet Master Porky on the 100th floor, who turns out to be an old man, and Lucas, Kumatora, Duster, Boney, and Flint go down to the Needle's location. Flint learns that the Masked Man is the missing Claus, and after the four of them battle Porky, he encases himself in a completely impenetrable capsule but is consequentially trapped inside for eternity. Lucas fights the Masked Man one-on-one, but cannot bring himself to hurt him. Hinawa's ghost tries to end the fight, leading Claus to regain his memories and kill himself in order to free his soul. Lucas pulls the final Needle, causing the islands and Pigmask Army to be destroyed and the Dragon to awaken. The player later learns that the world remained safe and that the inhabitants of the islands survived.