One year after the events of Yakuza, the Tojo Clan has been collapsing and are close to the brink of war with the Omi Alliance. Wishing to prevent further bloodshed the Tojo Clan's 5th Chairman  Yukio Terada seeks out Kazuma Kiryu for his help.

Kazuma Kiryu after years of serving the Dojima family was about to start his own family when things go to hell when his friend Nishiki Akira kills the head of the Yakuza family and Kiryu takes the rap for itl. Now he returns to town after having been in jail and expelled from the family for the past 10 years. He soon finds that things have not gotten much better, the third chairman was murdered and 10 billion yen is now missing from the treasury. On top of that, Kazuma is still a wanted man by his former family members.