The main storyline of the episode focuses on Luis' efforts to help Tony overcome various problems, including drugs, debts, disputes with Mafia crime families, and attempts on both of their lives.

Similarly to The Lost and Damned, the entire map is unlocked after completing the expansion's first mission, allowing players to freely traverse between Liberty City's main boroughs and Alderney.

The main storyline of The Ballad of Gay Tony takes place alongside that of the base game and of the first expansion, and features several returning characters and events.

A major part of the expansion's narrative focuses on a side-story about a shipment of stolen diamonds, which was only briefly depicted in Grand Theft Auto IV and The Lost and Damned, but receives a proper conclusion here in The Ballad of Gay Tony.

In 2008, after witnessing the robbery of the Bank of Liberty,[N 2] Luis Fernando Lopez (Mario D'Leon) meets with his boss and business partner, nightclub owner "Gay" Tony Prince (David Kenner).

Struggling to run the clubs Maisonette 9 and Hercules, Tony takes out loans from the Ancelotti crime family and Mori Kibbutz (Jeff Gurner), ending up in severe debt.

He assists Yusuf Amir (Omid Djalili), an Emirati real estate developer interested in buying Tony's clubs, with stealing an attack helicopter and using it to murder multiple arms dealers, an armoured personnel carrier, and a subway train.

However, the deal is ambushed by members of The Lost biker gang, led by Johnny Klebitz (Scott Hill), resulting in the death of Tony's boyfriend Evan Moss (Rob Youells) and the loss of the diamonds.

[N 4] During this time, Luis also takes on jobs for Russian crime lord Ray Bulgarin (Vitali Baganov), who offers to help cover Tony's debts, but turns on them when he reveals he was the original owner of the diamonds.

Complex named Anthony "Gay Tony" Prince "the coolest LGBT video game character" in a 2013 list, referring to him as "the hot mess of the GTA series".