The fleets of both armies have shattered each other in a bloody battle for the Thunderbolt Sector. Meanwhile, the ferocious duel between Io and Daryl leaves both the Full Armor Gundam and the Psycho Zaku heavily damaged and Io a prisoner of war.
On Earth, political turmoil has led the Nanyang Alliance to challenge Federation control. Now in possession of Zeon's priceless Reuse P Device technology, the Alliance moves forward with its plans.