The story begins with 5 friends, Andrew, Miranda, Martin, Robbie and Zoey, hanging out in their hometown called Haven City and trying to avoid the Krimzon Guards. One night, Miranda sees a hedgehog at the Krimzon Guard Fortress being tortured, so she, Andrew, Martin, Robbie and Zoey rescue him, but he doesn't remember who he is, but just his name, Z. Miranda an Z started to bond and Andrew became jealous.
Few days later, Andrew discovered that Miranda, Martin, Robbie, Zoey an Z never met him before and discovered that Miranda has been kidnapped by the Krimzon Guards, so Andrew goes to rescue her, but rans into a strange girl name Carol, who tells him that he and Miranda will disappear when he rescues her. Andrew rescues Miranda before she will be injected by some purple gooey stuff (Dark Eco), Miranda was scared of Andrew because she doesn't know him, but Andrew kissed Miranda and she remembers. When Andrew told Miranda that they will disappear, he told her that he will always be with her in her heart and they disappear making Martin, Robbie, Zoey and Z forget all about them.
In Twilight Town, Sonic and the others met Jak, Daxter, Samos and Keira Hagai again. Julie is reunited with Eddy, Ron, Claire, Pablo and Harold again. Harold told Julie to use the Rift Rider again to go to another world she always wanted to go to, and its accompanied Rift Gate (As told in Julie's Orgin Life of Kingdom Hearts: 358/2 Days). The Gate is activated, and the same huge figure steps out, accompanied by a swarm of creatures. When Julie and all of her friends go through, the Rider is destroyed, and they fall through the rift, ending up in Haven City. Jak is kidnapped by several Krimzon Guards and a captain, Erol. Two years later, Jak is seen in the Krimzon Guard Fortress, having been injected with Dark Eco. Two figures, Erol and Baron Praxis, look at Jak, and declare the "Dark Warrior Program a failure". Jak is left alone, to be rescued by Daxter, Sonic and the others and when they rescue Jak, they rescue a young hedgehog boy name Sora. Jak transforms into a monstrousity of Dark Jak, and then returns to normal, but for the first time, talks. The team escape the fortress, beginning the movie.
Once outside, they meet an old man named Kor, the Kid, a young child who resembles Jak and, fittingly, does not speak, Logan, a 17 year old girl who lives out in the streets, and Z, the guy who Andrew and his friends rescue at the Krimzon Guard Fortress. Sonic and Jak saves them from an approaching group of Krimzon Guards and, for the first time in public, transforms into Dark Jak, to the surprise of Kor. He then tells Jak to go see The Shadow, who is the leader of the Underground. Kor tells Jak that "they can help you." Upon finding the Hideout, however, Sonic, Jak and Daxter meet Torn, a high-ranking member of the Underground and Nicole the Hedgehog, a young tomboyish inventor who Sora starts to like. He assigns most of the missions and oversees an occasional few. He refuses to let Jak and Daxter see the Shadow until they have proven themselves, revealing he is suspicious and slightly cutthroat. Torn sent the two on many missions.
When the two infiltrate a KG fortress, they find a group of Krimzon Guards giving Eco to a group of Metal Heads, much to their surprise, as the two factions are meant to be at war. Torn then sends the "Demolition Duo" on a delivery job to the Hip Hog Heaven Saloon, where they meet the foul, morbidly obese boss, Krew, a tomboyish girl who is friends with Sora, Kiki, and his bodyguard Sig. Sonic, Jak and Daxter work with Sig and Krew, who give Jak weapons in return for his services.
After reporting back to Torn, they realize that Baron Praxis is working with the Metal Heads to stay on the throne, and that the war has been a distraction from Praxis' harsh government. In light of these events, Torn sends Sonic, Jak and Daxter on missions in which they meet Vin, a paranoid scientist, Pepper Fern, a young girl who developed a crush on Lin Chung, Niley, a yellow rabbit who has befriened Yin and Yang, Martin, Robbie and Zoey, Andrew and Miranda's friends who Sonic and the others rescued from the Krimzon Guards and Simon fell in love with Zoey, and Ashelin Praxis, a high ranking member of the Krimzon Guard who, unbeknownst to the rest of the Guard, has been working with The Underground.
Krew, who now deals out missions to Jak regularly, sends him to meet a racing manager down in the stadium. She is later revealed to be Keira Hagai. Torn tells Jak that the "Shadow" wants him to stop the Metal Heads from reaching "The Sacred Site" outside the city walls, in order to protect an important artifact from the creatures. At the end of this mission, Sonic, Jak, Daxter and the team make a horrifying discovery. They realize that the Sacred Site is actually the Clock Tower, meaning that they are in the future of Twilight Town. The Shadow is revealed to be Samos who, surprisingly to Jak and Daxter, didn't recognize them.
Despite having to deal with a younger (and possibly even grouchier) Samos, Sonic, Jak and Daxter press on to more important matters. They are told that the boy with Kor was important because, as heir to the throne of Mar, he can open the Tomb of Mar, which hides the Precursor Stone, a critical artifact in their efforts to win the war against the Metal Heads. Upon activating a beam in the forest, Sonic, Jak and Daxter destroy a statue of Baron Praxis, revealing that the Tomb is right beneath it. After taking the boy to the tomb, the Oracle states that the Kid is too young to face the Trials of Manhood, and the door begins to shut. Sonic, Jak and Daxter dive underneath it as it closes, in order to find the Precursor Stone. After completing the Trials Of Manhood, the duo enters the main room, which holds the Precursor Stone. An Oracle tells them that the Metal Heads are responsible for destroying the Precursors. Baron Praxis then arrived, and despite Jak's efforts, manages to escape with the Stone.
Back at the Hideout, Torn confesses that he sold the Underground out to prevent Praxis from killing Ashelin, the Baron's own daughter. This has led to the capture of several members of the Underground, whom the team then headed to the Fortress to rescue. After freeing the captives, the team are shocked to find that there are two Green Sages—the young Samos who leads the Underground, and Keira's father who was taken into the Rift Gate with them. Returning to the Hideout, both of the Sages send Jak to find the Life Seed in the old hut; the Life Seed would give young Samos the power that the old Samos himself has. Samos reveals that he was harvesting the Life Seed from the great tree in the hut years before they went through the Rift Gate. After escorting Young Samos to the forest, Jak learns from Samos' meditations about Praxis' plans to violently crack open the Stone in an effort to destroy the Metal Heads. This cracking of the Precursor Stone would certainly put an end to the Metal Heads. But, unbeknownst to Praxis, it would destroy everything else in existence as well.
Later, Keira reveals that she has nearly completed a replica Rift Rider based on the one that carried them into their current time, but that she is still missing two main pieces. Jak then races and wins for Keira's team, in order to gain an entrance pass to the Haven Palace. Praxis, however, orders the guards to kill Jak upon realizing who he is. Sonic, Jak and Daxter escape due to Erol, who tried to run them down because he lost the race. He instead misses them, crashing into several barrels of Dark Eco, which presumably kill him. At the Palace, Ashelin holds Jak at gunpoint, demanding to know why he has been sabotaging Praxis' war with the Metal Heads. She doesn't believe him when he tells her that her father's plan to crack the Precursor Stone will destroy the planet, until she calls Vin, who succeeds in convincing her.
Ashelin confided in Jak and Daxter that Krew is building something for the Baron at a secret Weapons Factory. Jak and Daxter proceed to the factory, and Krew reveals the Piercer Bomb, which has the power to destroy the Precursor Stone. Krew gives Jak a weapon damage upgrade mod, telling them to forget what they has seen. However, Sonic, Jak and Daxter refuse, choosing instead to fight Krew in order to stop his plan. Though defeated, Krew manages to activate the bomb in a last-ditch effort to kill Sonic and the team. They escaped with Ashelin, but Krew is left at the construction site and killed in the explosion of the Piercer Bomb. Sonic, Jak and Daxter escape only to discover that the Metal Heads have breached Haven City due to another treachery of Krew.
Sonic and the team now become worried for Sig, who was recently sent on 'one last mission' by Krew. After Jak finds him in the Underport, Sig reveals that the Metal Heads are coming in through a passage Krew that had him unknowingly open. Despite making it to the elevator out of the Underport, Sig disappears when a huge Metal Head caterpillar crashes through the bridge upon which he stood, and he is lost in the depths below.
The Team go to confront Baron Praxis at the Construction Site, but they ran into Z and Kor appeared. Kor reveals that Z is a part of him and is the leader of the Metal Heads, and proceeds to kill Baron Praxis. Praxis showed the heroes a second Piercer Bomb which truly hides the Precursor Stone. With this final revelation, Praxis dies, fulfilling Jak's initial wish, even if he did not do it himself. His last words were "Remember, the first rule in making a bomb...is to always make two". Daxter hastily recovers the Stone, disarming the Piercer Bomb and saving the world.
Sonic, Julie, Shadow, Molly, Jak, holding a scared Xuanne in his arms, and Daxter use the Precursor Stone, and attack the Metal Head Nest, in which they confront Kor, along with Darrienne and his Black Widow members. Kor makes the ultimate revelation that the Kid is a young Jak, and that Jak and the young Samos would go to the past to improve their skills up to this point. Sonic and Jak defeated Metal Kor, Julie cuts Darrienne's right ear and Sonic and the team sent Jak's past self and Samos to the past. The Precursor Stone was opened, but only a hologram of a Precursor comes out of it..
The group celebrates victory over the Metal Heads at the Hip Hog Heaven Saloon, which Daxter takes over for himself and renames "the Naughty Ottsel" and the team are sharing and living it. June has her own buisness called "June's Love, Joke, Music Doctor Export" and Stan has made the "Mystery Shack" (Like the same one in the past) and Sonic and the others will go to missions anytime they want. Sig reappears--to the excitement of all of the people at the party--having survived his seemingly final battle with the gigantic Metal Head caterpillar. Samos mourns and contemplates the deaths of Vin and all of the other people who gave their lives in pursuit of peace and justice throughout Haven City. Finally, Sig gives Jak the Ruby Key, an artifact with the ability to bypass all security in Haven, and says he was the designated driver. Jak grinned and adamantly says he is done with adventures. However, Samos cryptically hints that they may meet Mar someday, and that he may be closer than they think.
Haven City, peaceful at last, fades to black under a beautiful, firework-filled sky as the credits are displayed.
After the credits, Darrianne learned about Dark Eco and that Taylor and Thomas used to have it and that he needs some to be strong.