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.