Set after the first game, the player takes part in an elite defense force piloting a robot to protect the United Republic and stop PENTA, a rival to the Iron Fist Corporation seeking to occupy its former territory.

Following the release of Iron Soldier, Atari sought out developers to make killer apps for Jaguar CD and requested a sequel to the game.

[1][2][3] The premise is set after the first game, when the resistance establishes a democratic government called the United Republic (UR) after the world is liberated with the defeat of the Iron Fist Corporation (IFC).

[4][5][6] The player has to fulfill mission objectives ranging from destroying specific targets, escorting convoys, recovering items, defending buildings or finding and eliminating car bombs.

[14][15][16] It was co-produced by John Skruch, Sean Patten, Tal Funke-Bilu and Ted Tahquechi, who worked on several Jaguar titles such as Highlander: The Last of the MacLeods and I-War (1995).

[6] Rosocha explained that the game was made as a cartridge-sized ROM in the Alpine development kit to fit into the Atari Jaguar's memory and avoid loading times, only using the CD format for full-motion video (FMV) and music tracks.

[14][16][18] Production of the game lasted twelve months and was ready in early 1996, however, Rosocha received information from Skruch that new Jaguar projects were suspended and confirmed that Atari was abandoning the console market to merge with JTS.

[9] On December 15, 1997, Telegames released a stripped-down cartridge version for the Jaguar, with full-motion video (FMV) sequences and redbook audio removed due to memory limitations.

They also celebrated its soundscapes, excellent control setup and gameplay, but noted the increased difficulty and lack of additional missions, and lamented the loss of in-game music in the cartridge version.

[7] GamePro's Dan Amrich commended the texture-mapped polygonal graphics and energetic soundtrack, writing that "If this high-quality game had been released during Atari's life span, the Jaguar might have survived a little longer".

[4] Digital Press' Edward Villalpando felt that the sequel improved on the formula of the original Iron Soldier, citing better texture mapping, new enemies, and more action overall, but pointed out its relentless difficulty.

[10] AllGame's Kyle Knight praised the improved audiovisual presentation over its predecessor, as well as the fun gameplay and replay value, but felt that Iron Soldier 2 did not offer enough to be a great sequel and found its difficulty challenging.

[1] ST-Computer's Helge Bollinger commended the refined graphics, soundscapes, good controls and varied missions, stating that the game "can not only keep up with the competition from other systems, but can easily outdo them in terms of gameplay".

[2] Alain Coadec of the French ST Magazine gave positive remarks to the game's detailed environments, techno soundtrack, enjoyable playability, and overall longevity, but saw the high difficulty and repetitive objectives as negative points.

[44] Brett Daly of Jaguar Front Page News (a part of the GameSpy network) lauded the improved graphics, soundtrack and weapon selection over the original Iron Soldier, but highlighted the game's increased difficulty.