In the prologue (set during the Battle of A Baoa Qu in December U.C.0079), Zeon ace pilot Anavel Gato returns from combat to find Admiral Aiguille Delaz telling him of the deaths of Gihren Zabi and Kycilia Zabi, as the Zeon forces surrender. Despite the shock defeat, both men retreat and plan the return of Zeon. In October U.C.0083, the Federation space carrier Albion delivers two Gundam Development Project (GDP) prototypes, the RX-78 GP01 Zephyranthes and the GP02A Physalis, to the Torrington Base in Australia for ground testing under the aegis of Anaheim Electronics engineer Nina Purpleton. Because of lax security, a Zeon mole helps Gato infiltrate the base and hijack the GP02 just after its nuclear weapon is loaded in the middle of the night. Having witnessed Gato activate the mobile suit, Ensign Kou Uraki takes over the Zephyranthes and prepares to face him just as Zeon forces assault the base.

Kou, his friend Chuck Keith, and veterans South Burning and Dick Allen follow Gato through the outback in an attempt to recapture the Physalis. Zeon forces ambush them and kill Allen as Gato awaits a Komusai shuttle for extraction. Kou destroys the shuttle but it is actually a diversion - Gato escapes on a submarine that provided covering fire during the Torrington base attack.

Back at Torrington, Federation General John Kowen assigns Burning to lead the Albion's pursuit of Gato with a new crew of pilots to help him. Kou and Keith join the mission. Lt. Bernard Monsha, one of the new additions, doubts Kou's capability to fly the GP01. Despite Nina's assurance that Kou handled the mobile suit well, Monsha challenges him to a first-shot mobile suit duel to see who better deserves to pilot the Zephyranthes. Although Kou wins the match, Burning intervenes and sends both pilots to one week in the brig. Meanwhile, Gato heads for the Kinbareid diamond mine in East Africa, which is still occupied by Zeon holdouts from the One Year War.

Somewhere in East Africa, the Albion goes on patrol, while Monsha faces Albion chief engineer Mora Bascht's wrath for hitting on the ship's female crew and trying to sabotage Kou's landing after his search patrol. Gato arrives at Kinbareid and boosts the morale of the soldiers. Meanwhile, Orville - the Zeon mole who helped Gato's infiltration in the first episode - has been unmasked and flies out in a Core Fighter II to warn Kinbareid of the Albion's patrols but could not find the base complex and is shot down by a Zaku patrol. The Zeon forces mobilize and attack the Albion to buy time for Gato and the GP02 to fly into orbit using one Heavy Launch Vehicle still in the base. The base holdouts surrender as soon as Gato flies away.

The Albion arrives at Von Braun City on the Moon to have the GP01 upgraded to Full Vernian (Full Burnern) while the crew goes on shore leave. A snide comment from Monsha at a bar prompts Kou to wander around the city where he is beaten up by some thugs. A one-armed man named Kelley Layzner rescues him and brings him to a junkyard where he lives with his lover. Kou learns of Kelley's origins as a Zeon pilot and helps him fix a Val Walo mobile armor that has been hidden for years. He returns to the Albion and begins testing the Full Vernian-equipped GP01. Elsewhere in the city, Cima blackmails Anaheim boss Gilbert O'Sullivan with a colony drop if he talks to the Federation about her. She also tells Kelley to get the Val Walo ready for action.

Cima's blackmailing apparently works, as Anaheim asks Nina to be reassigned away from the Albion and out of the mobile suit development team altogether. Keith, who dates Mora, offers Kou movie tickets so he can ask Nina out after a field test. He does make a move, but a remark about the tests angers Nina again. Meanwhile, Kelley gets paid in gold bullion for his work on the Val Walo, but is shocked to hear that the Zeon forces do not want him piloting it for the new campaign. Incensed, Kelley takes out the mobile armor and challenges Kou to fight him so he could prove himself worthy of joining the Delaz Fleet again. When Nina gets in the way, Kou finally admits his feelings for her and defeats Kelley, who does not bail out from the exploding Val Walo because he never installed an escape system.

A few days out of Von Braun, Burning continues to train Kou and Keith, who later eggs him to try giving Nina a chance. Keith also earns Mora's ire for showing him Monsha's private collection of Nina pictures. A resupply rendezvous by a Federation ship is cut short as the Albion detects the Federation flagship Birmingham, with General Green Wyatt aboard - meeting with Cima. In the midst of the ensuing battle, Burning retrieves a briefcase that contains files for something called "Operation Stardust" and talks with Kou about them. However, a minor hit on Burning's GM Custom during the battle turns fatal, as the mobile suit careens out of control and explodes. Uraki is promoted to junior lieutenant as the crew mourns Burning's death.

Kou and Keith continue to fight Zeon forces while on patrol near Konpeitoh (Solomon). As Delaz welcomes the Axis Advance Fleet into the Earth Sphere, Gato prepares for his own part of an attack on Konpeitoh, which is hosting the Naval Review. The Delaz Fleet keeps probing the Federation defenses, keeping Kou occupied. A defense satellite detects Gato breaking through another sector and Uraki is ordered to intercept him before he crashes the Review. He fails to get to Gato in time, as the Zeon pilot fires the GP02's MK82 nuclear bazooka at the Federation fleet with the Birmingham in the center of his sights.

Gato retreats after the nuclear strike destroys two-thirds of the Federation's fleet, but runs into Kou. As Nina breaks down watching them fight, both of their mobile suits take heavy damage and the pilots flee before they explode. Meanwhile, Cima's fleet hijacks two colonies in transport and later blow off one mirror each from them. When the Albion crew is informed of the colonyjack, Nina correctly theorizes that the colonies will crash into each other, with one in direct course for the Moon. She also reveals the existence of a third Gundam built under the GDP.

The Albion arrives at Anaheim Electronics' La Vie En Rose research ship to get the GP03 Dendrobium Stamen, where they are met by designer Lucette Auduvie and Federation officer Nakaha Nakato. Almost immediately, Nakato tells the crew that the GDP has been suspended and they are all confined to the Albion until further notice. Lucette shows Kou the GP03's diagrams and later sacrifices her life to stop Nakato killing Kou as he takes over the GP03 with the Albion crew's help and leave La Vie En Rose. Meanwhile, the Federation command expresses indifference at the upcoming Zeon colony drop on the Moon. The Konpeitoh survivors mobilize and try to stop it, but run out of fuel when Cima maneuvers to have Von Braun City's laser station activate the colony's engines to redirect it toward Earth. Gato also meets up with the Axis Advance Fleet, where he gets the massive Neue Ziel mobile armor and tries it against a small Federation patrol.

Kou and Gato, now in their mobile armors, finally take each other on as the Albion crew tries to stop the colony before it passes the minimum limit for terminal entry. Cima's crew takes Delaz hostage aboard his flagship, the Gwaden. At Jaburo, General Kowen desperately tries to convince EFSF supreme commander Gen Gene Collini of mobilizing the military's full might to stop the colony, but Jamitov Hymen has Kowen taken away. Delaz discovers that the Federation has deployed the Solar System II mirror array past the terminal entry point and encourages Gato to see the operation through - before Cima kills him. Out of rage, Gato drives one of the Neue Ziel's claws at the Gwaden bridge.

The battle to stop the colony goes full-blast, with the Federation and Cima's forces working together to protect the Solar System II on one hand and the Delaz fleet shepherding the colony on the other while the Axis Advance Fleet stands back. Kou kills Cima in the fracas. The Solar System II fires, but Gato destroys the command ship, resulting in a weaker blast that barely damages the colony. As it breaks through the solar array, Gato enters the colony and inputs the final course corrections. Kou tries to stop him, but Nina interferes and protects Gato as they leave, revealing that they were once lovers. The two pilots continue to fight after Gato has Karius bring Nina to safety. The Solar System II remnants fire again, with many forces on both sides destroyed as the colony crashes into the Midwest. The Federation orders the Axis Advance Fleet to leave the Earth Sphere immediately, having overstayed their welcome, but Gato leads the Delaz Fleet survivors to attempt a breakthrough and dies in a kamikaze attack on a Federation ship. Several weeks later, Hymen and Bask Om announce the creation of the Titans. All records of Operation Stardust and the GP are erased, including Kou's one-year hard labor sentence. He eventually reunites with Nina, Keith, and Mora.