The game's gameplay is partially free-roaming, allowing the player to travel around the islands once they have been "unlocked" by completing certain objectives; there are also many tasks which are optional or non-linear.

Rather, the latter part of LBA 2 is set on Zeelich which is a two-layered planet with numerous points of interest on each layer.

After Twinsen defeated FunFrock at the end of Little Big Adventure, Twinsun was peaceful, until a sudden storm covered Citadel Island.

The Dino-Fly, a creature encountered in LBA is struck by lightning and crashes in Twinsen and Zoe's garden.

Twinsen seeks help from Ker'aooc, a healing wizard, who lives on Desert Island, but ferry crossings are cancelled.

Twinsen visits the Wizard's School and learns from his master that in order to proceed in his journey and face the Esmers, who prove to be more than he can handle, he must obtain a powerful artifact from beneath Citadel Island.

Twinsen then discovers the secret Esmer base on Desert Island beneath the Temple of Bu (where in the first game, Twinsen found the Book of Bu to reach the second level of magic), then hijacks an Esmer spaceship to travel to Emerald Moon.

Its inhabitants await the day when a certain prophecy will be fulfilled, and the Dark Monk, the shadow god, will emerge and restore Zeelich.

After assistance from Esmers rebels, Twinsen discovers that the Emperor of Zeelich has made a deal with the Dark Monk.

FunFrock deceived the Esmerians so they could carry out his plan to destroy Twinsun in order for him to steal the powers of Sendell, the goddess of the planet.

After overcoming FunFrock and his clone army, Twinsen attempts to stop Emerald Moon from crashing into the Twinsun but is unsuccessful even with Sendell's powers.

Fortunately, the Esmerians, who are freed of Dark Monk's deception, intervene and destroy the rocket engine upon Emerald Moon.