The Chao have vanished, and Sonic the Hedgehog and Miles “Tails” Prower set out to find them. Eggman Nega (again masquerading as Doctor Eggman) has stolen and hidden the Chao inside a haunted mansion. He plans to feed them to the “Ifrit,” an interdimensional beast that needs to eat them to become invincible. He intends to unleash the Ifrit on the world to destroy it. However, the seven Chaos Emeralds are required to open the portal to the world of Ifrit. Eggman Nega secretly hires Rouge the Bat to collect the Chaos Emeralds. Knuckles the Echidna teams up with Rouge to find Master Emerald, which has gone missing (again).
Meanwhile, Silver the Hedgehog has returned from a future that the Ifrit has ruined. He searches for and steals the remaining Chao to hide them to create a better lot. Espio initially believed Silver hid Chao for the wrong reasons, but Silver was trying to save the world. They then collaborate to save the world. The real Dr. Eggman sends Metal Sonic to find Shadow and inform him of Nega’s plans. Nega discovered the Ifrit by reading Professor Gerald Robotnik’s journals, so Shadow and Metal Sonic set out to find the Chaos Emeralds before he did. Eggman employs Metal Sonic as a communication device to assist Shadow on his journey. The teams assemble at the Mystic Haunt Zone, which houses the portal to the world of Ifrit. Despite Rouge only collecting six of the Emeralds, the portal opens, and Nega dispatches Metal Sonic 3.0, his newly copied Metal Sonic, to awaken the Ifrit. The Ifrit is defeated by the other teams despite possessing the minds of Sonic, Tails, Knuckles, and Rouge (depending on who the player plays as). Shadow and Metal Sonic defeat the Ifrit and close the portal, but they are trapped in the Ifrit’s dimension, as is Eggman Nega.
On the other hand, Metal Sonic rips his chassis open, revealing the 7th Chaos Emerald. Shadow teleports back with Metal Sonic using the Emerald. Nega is trapped beneath some rubble. Sonic and Tails rescue all of the Chao and transport them to a Chao Garden, where they can relax while Knuckles searches for Master Emerald in the Emerald Detector that he and Rouge stole from Eggman Nega. Rouge flees with Master Emerald, and Silver returns to what he hopes will be a happy future. Vector, the Crocodile, must confront Espio, who has spent their client’s advance payment on late rental fees.
