Following the Eurasia and Nightmare incidents, Reploids work diligently to rebuild the Earth. Growing weary of the seemingly never-ending Maverick Wars, X decides to retire in search of more peaceful solutions, leaving Zero in charge. In X's absence, Maverick activity rapidly begins to rise, which leads to the formation of an unsanctioned anti-Maverick vigilante group known as Red Alert. As the group grows more and more reckless, one of their members, a new generation Reploid prototype named Axl, decides to defect. Red, the group's leader, is angered by Axl deserting them, and goes on a rampage to get him back.
Axl is chased through a city by a mechaniloid sent by Red Alert to retrieve him, and the ensuing chaos draws the attention of Zero. After a battle against the mechaniloid, Zero takes Axl into custody at Maverick Hunter HQ. In response, Red issues a challenge to the Hunters: he will release some Mavericks that Red Alert has in captivity, and whichever group can defeat the Mavericks first will gain possession of Axl. Zero goes into action without hesitation, and Axl's remorse for what he has done fuels his desire to become a Maverick Hunter. As Zero and Axl battle Red Alert, Axl reveals that he possesses the ability to copy the DNA of other Reploids, making him invaluable to Red. X initially stays out of the conflict, feeling that it is pointless, but joins in hoping to end the war quickly. Elsewhere, Red communicates with a mysterious figure known as "The Professor," who gives him additional power and shows him what Axl's copy ability can do. The Professor then takes possession of Red Alert, and orders Red to retrieve Axl.
Following the defeat of the Mavericks, the Hunters infiltrate Crimson Palace, the home base of Red Alert. There they defeat a reluctant Red and discover a rebuilt Sigma, who was behind Red Alert's corruption. Despite the Hunters defeating Sigma twice, he rises once again and punches Axl through a wall, before vowing to X and Zero that he will again return. Suddenly, Red reappears and Sigma attempts to possess him, but it turns out to be Axl (copying Red's DNA), who then proceeds to blast Sigma out of a window from the top of the palace.
The ending of the game depends on which character was used to defeat Sigma:
In X's ending, X adamantly refuses to train Axl to become a Maverick Hunter, thinking he is too young and immature. Signas tries to reason with X, warning him that they have not seen the last of the Mavericks.
Axl's ending shows him arguing with X regarding his future as a Hunter. Alia interrupts to inform them of a Maverick outbreak, to which Axl runs off to deal with, much to X's displeasure.
In Zero's ending, he has a nightmare in which X gains a strange desire to destroy all Mavericks, foreshadowing the rise of Copy X in Mega Man Zero.
Gameplay
Mega Man X7 is the first of the two games in the series to have 3D gameplay in addition to the standard 2D style. When starting the game, the player has only access to returning Maverick Hunter Zero and newcomer Axl. The player can send the two characters to the same stage and both can be changed whenever the player needs to. In order to unlock X, the player must rescue 64 reploids (out of a possible total of 128) or defeat the eight main bosses in order to unlock him. Unlike the prequel, chips must be used immediately after they are gained and cannot be deactivated, nor changed from one playable character to another. Once all the chips for that playable character are completely maxed out, that particular character can no longer receive anymore chip upgrades.
While Zero and X retain their common weaponry, Axl has a new ability called "Copy Shot". If the player destroys certain types of enemies with said technique, they will leave an item upon their destruction. If the item (a glowing red sphere) is picked up, Axl will transform into a copy of the enemy he destroyed, with all of its features (speed, weapon, etc.).
The game also has a New Game Plus feature, by completing the game and saving it, and then start a new game from loading that particular save file. This feature allows for X to become available after the opening stage and all the chip upgrades from the previous game are retained.
Reception
Mega Man X7 debuted on Japanese sales charts as the third best-selling video game at copies. By its second week on sale, the game had sold 71,739 copies in the region and by its third week, 89,775 copies. Media Create sales data lists the game as having sold 111,778 copies by the end of 2003 in Japan. A budget re-release of the game was included alongside the PlayStation versions of the first six original Mega Man games as part of the Rockman Collection in Japan on December 19, 2003.
Mega Man X7 received mixed to negative reviews. While it attracted some positive remarks for the character switching and Reploid rescue systems, the general consensus was that the game's mixture of 2D and 3D gameplay was well-intentioned but poorly executed. IGN found the characters unbalanced as the shooters X and Axl felt far more useful than the melee fighter Zero. In particular, critics commented that the camera and controls do not translate well from 2D to 3D. Criticism has been aimed at the English voice actors' performance, to the point that it has been recommended to try listening to the original Japanese audio. The music has been described as generic and, while appealing, it does not stand out against what previous installments have offered.
GameSpy concluded "I can't fault Capcom or the MMX7 team for trying to reinvent a series that had obviously completely lost its way... but the flaccid 2D sections in this game aren't half as good as any of the levels in the original Mega Man X. The 3D bits are more compelling, but still substandard." IGN instead placed the blame wholly on the 3D sections: "We can't help but think that Mega Man X7 would have been better-suited staying 2D. But until Capcom realizes that the better action-oriented 3D titles allow you to manipulate the camera whole-heartedly, future installments of the series will likely run into the same problems that this one did."
In a retrospective article involving the franchise's worst games, 1UP.com included Mega Man X7 citing "usual 3D design issues" and the titular character requiring to be unlocked as the game's flaws. GamesRadar compared it with the similarly poor received Castlevania for the Nintendo 64 due to how both games tried staying away from their predecessors' formula by adding 3D gameplay and the transition failed to gamers.