In 2001, a young Damon Ricotello goes to the woods at night and discovers a crash site, encountering FU as a small injured alien larva. Damon decides to take care of FU while hiding him from government agents. The two become friends while searching for a way to return FU to his planet. After discovering a piece of alien technology at FU's crash site, Damon is imbued with alien powers and assists FU in building a space ship. They say goodbye to each other and FU departs, promising to return. Twenty years later (two years after the events of Travis Strikes Again), an adult Damon manages Utopinia as its CEO, utilizing FU's alien abilities and technology to prosper and become a wealthy business magnate. An adult FU returns to Earth in a large spaceship, alongside nine additional aliens, and reveals to Damon that he became a prince after returning to his home world, only to be exiled to an intergalactic prison for destroying a neighboring planet. He announces their intention to team up with Damon and take over Earth by employing the popular trend of superheroism.
The game marks a return to the series' open world format last seen in the first game and has the player explore a man-made archipelago, taking on various side activities such as part-time job minigames, and defense missions where the player must battle waves of enemies. In a new addition to the series, the open world is split into five unique islands. The player can traverse around and between the islands with Travis' new modified motorcycle; the "Demzamtiger". Travel between islands can also be expedited via a fast travel system. To progress in the game, the player must accrue enough money from missions to pay an entry-fee to a ranked battle. The player must then face off against one of the Rankings' top contenders in a unique boss battle.