In the prologue (set during the Battle of A Baoa Qu in December U.C.0079), Zeon ace pilot Anavel Gato returns from combat to find Admiral Aiguille Delaz telling him of the deaths of Gihren Zabi and Kycilia Zabi, as the Zeon forces surrender. Despite the shock defeat, both men retreat and plan the return of Zeon. In October U.C.0083, the Federation space carrier Albion delivers two Gundam Development Project (GDP) prototypes, the RX-78 GP01 Zephyranthes and the GP02A Physalis, to the Torrington Base in Australia for ground testing under the aegis of Anaheim Electronics engineer Nina Purpleton. Because of lax security, a Zeon mole helps Gato infiltrate the base and hijack the GP02 just after its nuclear weapon is loaded in the middle of the night. Having witnessed Gato activate the mobile suit, Ensign Kou Uraki takes over the Zephyranthes and prepares to face him just as Zeon forces assault the base.

Back at Torrington, Federation General John Kowen assigns Burning to lead the Albion's pursuit of Gato with a new crew of pilots to help him. Kou and Keith join the mission. Lt. Bernard Monsha, one of the new additions, doubts Kou's capability to fly the GP01. Despite Nina's assurance that Kou handled the mobile suit well, Monsha challenges him to a first-shot mobile suit duel to see who better deserves to pilot the Zephyranthes. Although Kou wins the match, Burning intervenes and sends both pilots to one week in the brig. Meanwhile, Gato heads for the Kinbareid diamond mine in East Africa, which is still occupied by Zeon holdouts from the One Year War.

Gato flies back to the Garden of Thorns, a secret Zeon colony base in the Shoal Zone, to present the GP02 to Delaz. However, a chance encounter with Zeon commander Cima Garahau rankles him when their ships almost collide. Upon delivering the GP02, Delaz makes an Earth Sphere-wide declaration of war, explaining that the GP02 and its nuclear weapon is proof of the Earth Federation's military buildup. Meanwhile, aboard the Albion, Nina tries to get closer to a dense Kou when the alert sounds. Kou and the rest of the Albion's mobile suit pilots engage the Zeon intruders. However, Nina's warning about the GP-01's poor mobility in space without the so-called Full Vernian (Full Burnern) backpack proves true as Kou crashlands in the Albion under heavy damage.

Cima's blackmailing apparently works, as Anaheim asks Nina to be reassigned away from the Albion and out of the mobile suit development team altogether. Keith, who dates Mora, offers Kou movie tickets so he can ask Nina out after a field test. He does make a move, but a remark about the tests angers Nina again. Meanwhile, Kelley gets paid in gold bullion for his work on the Val Walo, but is shocked to hear that the Zeon forces do not want him piloting it for the new campaign. Incensed, Kelley takes out the mobile armor and challenges Kou to fight him so he could prove himself worthy of joining the Delaz Fleet again. When Nina gets in the way, Kou finally admits his feelings for her and defeats Kelley, who does not bail out from the exploding Val Walo because he never installed an escape system.

Kou and Keith continue to fight Zeon forces while on patrol near Konpeitoh (Solomon). As Delaz welcomes the Axis Advance Fleet into the Earth Sphere, Gato prepares for his own part of an attack on Konpeitoh, which is hosting the Naval Review. The Delaz Fleet keeps probing the Federation defenses, keeping Kou occupied. A defense satellite detects Gato breaking through another sector and Uraki is ordered to intercept him before he crashes the Review. He fails to get to Gato in time, as the Zeon pilot fires the GP02's MK82 nuclear bazooka at the Federation fleet with the Birmingham in the center of his sights.