In the beginning, a Nazi naval officer and a group of German sailors on board the battleship Tirpitz have been tricked into thinking B.J. Blazkowitz is the general after donning the general's hat, boots, and jacket. After seeing the blood stains dripping from the edge of the jacket, the sailors realize that there's a spy on board who has killed the actual general. As Blazkowitz fights the men on board he's forced to surrender by an officer, who orders him to show him the glowing object hidden in the jacket. He finds a mysterious medallion in the general's jacket and the officer orders the men to kill him, but he accidentally pushed the trigger which projects a shield over him that reflects the bullets back at the men, creating a cosmic energy wave that melts the men and officer. Hijacking a plane from a German airman, he escapes off the exploding Tirpitz and returns back to the OSA headquarters. During a meeting at OSA headquarters, he learns that the medallion needs crystals called Nachtsonne (found only in Isenstadt) to make use of its full power. The Nazis have begun digging for crystals, led by a Nazi general named Victor Zetta. Blazkowicz is sent to Isenstadt, but his cover is blown by an unknown informant. He then meets up with agents from the Kreisau Circle, and with them, makes it to Isenstadt.
In Isenstadt, he meets the brothers Stephan and Anton Kriege, who run the Black Market where Blazkowicz can upgrade all of his weapons and powers. (He pays for upgrades with gold earned from missions or found scattered throughout the game.) He also meets the leader of the Kreisau Circle, a former schoolteacher named Caroline Becker. Becker sends Blazkowicz on a mission into the dig site, where he finds a young Russian named Sergei Kovlov. He also finds an exact copy of the medallion that he found on the Nazi warship, which Kovlov calls the Thule Medallion. Kovlov introduces Blazkowicz to the Golden Dawn, a group of scholars who specialize in the occult, led by Dr. Leonid Alexandrov. The youth also shows Blazkowicz how to use the Thule Medallion. With a crystal contributed by Kovlov, Blazkowicz is able to enter the Veil, a barrier between the real world and a dimension known as the Black Sun. Using the Veil, he manages to escape. As Blazkowicz completes more missions, he gains new weapons and new powers for the Thule Medallion. Eventually, he manages to kill General Zetta, who turns out to be a monster when viewed through the Veil. The Black Market, the Kreisau Circle, and the Golden Dawn then move to a new location in Isenstadt to escape retaliation for Zetta's death.
Shortly after the move, Caroline Becker is captured and held in a nearby castle. Blazkowicz helps the Kreisau Circle stage a rescue mission. He confronts Zetta's replacement, Wilhelm “Deathshead” Strasse, who is eager for revenge after the events of Return to Castle Wolfenstein. During a struggle, Caroline is killed by Hans Grosse, Deathshead's henchman. Upon Blazkowicz's return to Isenstadt, Stephan Kriege informs him that he has killed his brother for being a mole and betraying both Blazkowicz and Caroline. Blazkowicz then finds out that a Nazi superweapon, powered by Black Sun energy, is about to be fired at the city from a zeppelin. He boards the airship, where he discovers that Dr. Alexandrov is also a mole. Alexandrov's treachery is repaid by an execution at the hand of Hans Grosse. In order to prepare the weapon, Deathshead and Grosse enter the Black Sun through a portal that Nazi scientists had excavated and reassembled. Blazkowicz jumps in after them. In the Black Sun, he encounters Hans Grosse guarding the machine that powers Deathshead's superweapon. Grosse greets him in a mechanical suit outfitted with two chainguns (recreating his earlier appearance in Wolfenstein 3D), and a Thule Medallion identical to Blazkowicz's. Blazkowicz kills Grosse by jamming the Nachtsonne crystals from his medallion into Grosse's. He then destroys the machine, but Deathshead flees through the portal before B.J. can capture him. The explosion takes out both the portal and the zeppelin on the other side, effectively destroying all ways of accessing the Black Sun (incidentally rendering Blazkowicz's Thule Medallion useless as well). In a post-credits cutscene, Deathshead is seen clambering out of the zeppelin wreckage, screaming in frustration.