In the year UC 0071, three years after escaping the Zabi faction on an Ocean Cargo ship, Artesia and Casval are living happily in Andalusia, Spain, Earth under the identities of Sayla Mass and Éduoard Mass, respectively; masquerading as the children of Don Teabolo Mass, a long time friend of their father Zeon Zum Deikun.

Following the success of the Dawn Rebellion, Degwin negotiates with Vice Admiral Revil to surrender all Federation assets and the complete withdrawal of Federation forces from Side 3 to prevent similar incidents from happening again. After bring reprimanded by Degwin for failure to look after Garma, Dozle sends Char - who motivated Garma into starting the rebellion - to Earth; in response, Char requests to become a mobile suit pilot when he returns. Feeling the burden of his responsibilities, Dozle proposes to cadet Zenna Mia. In the Earth city of Manaus, Char lands a job as a mobile worker pilot at a construction site. He meets a young Lalah Sune at a casino.

Universal Century 0079. Humanity has turned even space itself into a battlefield, and the Principality of Zeon forces advance after wiping out half the world's population by carrying out the Operation British (colony drop). In response, the Earth Federation Forces mobilize their overwhelming fighting strength to regain the advantage. The complex intrigues of the Zabi family... Sayla Mass, as she contends with the whims of fate... Hamon and Ramba Ral, who is now a pilot in the Zeon forces... Amuro and Fraw, leading peaceful lives at Side 7... a dark shadow falls across them all. And the Zeon ace Char Aznable, driven by revenge, goes into action as the "Battle of Loum" finally begins.

On January 23, U.C. 0079, a decisive battle between Zeon and the Earth Federation begins at Side 5, or Loum. Though the Zeon forces are overwhelmingly outnumbered, their secret plan suddenly turns the tide of battle as they deploy a special assault regiment made up of humanoid mobile suit weapons, winning them a huge victory. Char Aznable of the Zeon forces produces particularly impressive results in his red mobile suit “Zaku II”, earning a promotion to Lieutenant Commander and the nickname "Red Comet." After the Battle of Loum, the Earth Federation Forces initiate Operation V to fight back against Zeon. At Side 7, young Amuro Ray is indirectly involved as he takes action to uncover the secret of the new weapon "Gundam." Meanwhile, as high officials of the Earth Federation and Zeon forces meet in Antarctica for early peace negotiations, a certain speech is broadcast from Luna II throughout the world...