The game takes place in the same fictional universe as the previous numbered games in the series. Following the events of Ace Combat 04 and Ace Combat 5, the Osean Federation brokered peace between the military power of Erusea and the rest of the Usean continent. The IUN was formed to maintain peace across the Usean continent, while former President Vincent Harling orders a space elevator funded off the Erusean coast in order to revitalize the continent's economy. However, the space elevator creates resentment among the Eruseans, who see it as Osean intrusion.
The players control the game's silent protagonist, callsign "Trigger", an Osean pilot. The game's frame story is told through pre-rendered cutscenes played between missions, primarily from the point of view of two biased characters: Avril Mead, a civilian aircraft mechanic who was caught in the crossfire and forced to work in an Osean penal military unit; and Doctor Schroeder, the game's primary antagonist, who masterminded the conflict. The game also features several other voiced characters with their own side stories, including Princess Rosa Cosette D'Elise, General Labarthe, Major McOnie as well as pilots of the Mage, Golem, Spare, Strider, Cyclops, and Sol squadrons. As the game progresses, the characters' stories intersect with each other and with Trigger's story to reveal the true nature of the war.
Rising tensions between the Osean Federation and the Kingdom of Erusea culminate when Erusea launches a surprise attack using a massive number of combat drones against Osean military targets and captures much of the Usean continent, including the International Space Elevator (ISEV) and two Osean airborne drone carriers, known as Arsenal Birds, that protect the ISEV.
During a mission to extract former Osean president Vincent Harling from the ISEV, a missile hits Harling's aircraft, killing him. Osean pilot Trigger is accused of firing the missile, found guilty by court martial, and is transferred to 444th Fighter Squadron "Spare", a penal military unit where Avril has been sentenced to forced labour as a mechanic for violating military airspace. Considered "expendable" by the warden, they are sent on several dangerous missions. Trigger crosses paths with Erusean ace Mihaly A. Shilage, who provides flight data to the Erusean drone program headed by the Belkan scientist Dr. Schroeder.
For their commendable performance, the 444th is folded into the Osean Air Defense Force to assist with securing an airbase on Tyler Island, and Trigger himself is pardoned and given command of Strider Squadron, part of Osea's Long Range Strategic Strike Group (LRSSG). Assisted by the LRSSG, Osea mounts a series of counter-offensives, destroying one of the Arsenal Birds with a refurbished Stonehenge, a railgun array featured in Ace Combat 04: Shattered Skies. During Osea‘s invasion of the Erusean capital, Farbanti, Trigger dogfights Mihaly again. However, Osea and Erusea destroy each others' satellite network during the battle, causing a collisional cascade that breaks down satellite communication networks worldwide. Mihaly escapes in the confusion; Erusea collapses into a civil war and loses control over its AI-controlled drone fleet.
Operating independently, LRSSG attempts to extract Erusean General Labarthe who reveals that the war was instigated by Erusean radicals and that Harling was killed by an Erusean drone that spoofed Osean IFF signals. Due to the communications breakdown, Labarthe is killed by other Osean forces. Trigger saves Dr. Schroeder and Ionela (Mihaly's granddaughter) from Erusean conservatives.
Meanwhile, Avril and the remainder of the 444th squadron land on their Tyler Island base, only to find it ravaged by war due to the rebellion of Osean penal units. They find Erusean Princess Rosa Cosette D'Elise, whose liaison plane was shot down by rebels. Avril and Rosa aid LRSSG in evacuating both friendly military units and refugees from the island.
Trigger duels Mihaly for a final time; Mihaly is defeated and pleads Trigger to stop the drones he created. Schroeder brings Mihaly's flight data to the ISEV, intending to transmit it to automated drone factories across the continent. Ionela, however, destroys the data upon learning of his intentions, but not before Schroeder had already uploaded it to two next-generation drones, Hugin and Munin. Already disillusioned by the destructive war his program had caused, Schroeder agrees to assist Avril and Ionela in taking down the drones' construction facilities but admits that he can do nothing about the data that was already uploaded.
A coalition of Osean and Erusean forces launches an attack on the ISEV with the intention of seizing it from Erusean radicals. Rosa and Avril secretly aid in bringing down the second Arsenal Bird. Hugin and Munin join the battle but Trigger leads the coalition forces to fight back. One is shot down, but the other escapes into ISEV from an undersea tunnel. Trigger gives chase and destroys it, finally ending the war.
In the VR mode of the game, Mobius 1 engages in combat against the Free Erusea terrorist group. This storyline occurs separately from the main plot.