Taking place shortly after the events of the novel Halo: First Strike, Halo 2 opens with the trial of a Covenant Elite commander aboard the Covenant's mobile capital city of High Charity. The Elite is stripped of his rank, branded a heretic for failing to stop the humans from destroying Halo, and is tortured by Tartarus, the Chieftain of the Covenant Brutes. On Earth, the Master Chief and Sergeant Avery Johnson are commended for their actions at Halo. Lord Terrence Hood awards the soldiers alongside Commander Miranda Keyes, who accepts a medal on behalf of her deceased father, Captain Jacob Keyes.
A Covenant fleet appears outside Earth's defensive perimeter and begins an invasion of the planet. While the UNSC repels most of the fleet, a single Covenant cruiser carrying an important member of the Covenant hierarchy, the High Prophet of Regret, assaults the city of New Mombasa, Kenya. The Master Chief assists in clearing the city of Covenant; with his fleet destroyed, Regret makes a hasty slipspace jump, and Keyes, Johnson, Cortana and the Master Chief follow aboard the UNSC ship In Amber Clad. The crew discover another Halo installation; realizing the danger the ring presents, Keyes sends the Master Chief to kill Regret while she and Johnson find Halo's key to activation, the Index.
Meanwhile, the disgraced Covenant commander is presented before the Prophet Hierarchs, who acknowledge that though the destruction of Halo was his fault, he is no heretic. They offer him the honored position of Arbiter so that he can continue to fight for the Covenant. On his first mission to kill a heretic, the Arbiter discovers 343 Guilty Spark, who the Covenant calls an "oracle," and brings him back to High Charity. Responding to Regret's distress call, High Charity and the Covenant fleet arrive at the new Halo, Installation 05, just before the Master Chief kills Regret. Bombarded from space, the Chief falls into a lake and is rescued by a mysterious tentacled creature.
The death of Regret sows seeds of discord among the races of the Covenant, as the Hierarchs have given the Brutes the Elites' traditional job of protecting them in the wake of the death. The Arbiter is sent to find Halo's Index and captures it, Johnson, and Keyes before being confronted by Tartarus. He reveals to the Arbiter that the Prophets have ordered the annihilation of the Elites, and sends the Arbiter falling down a deep chasm.
The Arbiter is saved by the tentacled creature and meets the Master Chief in the bowels of the installation. The creature, Gravemind, is the leader of the Flood on Installation 05. Gravemind reveals to the Arbiter that the Great Journey would destroy Flood, humans, and Covenant together. Gravemind sends the Arbiter and Master Chief to different places to stop Halo's activation. The Master Chief is teleported into High Charity, where a civil war has broken out among the Covenant; In Amber Clad crashes into the city, and Cortana realizes that Gravemind used them as a distraction to infest In Amber Clad and spread the Flood. As the parasite overruns the city, consuming the Prophet of Mercy in the process, the Prophet of Truth orders Tartarus to take Keyes, Johnson, and Guilty Spark to Halo's control room and activate the ring. The Master Chief follows Truth aboard a Forerunner ship leaving the city; Cortana remains behind to destroy High Charity and Halo if Tartarus succeeds in activating the ring.
The Arbiter is sent to the surface of Halo, where he rallies his allies to assault the Brute's position. With the help of Johnson, he confronts Tartarus in Halo's control room. When the Arbiter tries to convince Tartarus that the Prophets have betrayed them both, Tartarus angrily activates the ring, and a battle ensues. The Arbiter and Johnson manage to kill Tartarus while Keyes removes the Index. Instead of shutting down the ring entirely, a system wide fail-safe protocol is triggered, putting Installation 05 and all the other Halo rings on standby for activation from a remote location, which Guilty Spark refers to as "the Ark". As Truth's ship arrives amidst a raging battle on Earth, Hood asks the Master Chief what he is doing aboard the ship. The Chief replies, "Sir, finishing this fight."