Halo 2 opens with an awards ceremony on the Cairo weapons platform orbiting Earth. This ceremony is cut short when a Covenant flagship jumps out of slipspace and sends boarding parties towards the weapons platforms. These boarding parties are carrying heavy explosives designed to take out the MAC (Magnetic Accelerator Cannon) guns capable of destroying the Covenant flagships. Master Chief finds and disarms the bomb with the help of Cortana, then sends it to one of the Covenant ships and detonates it. They then head to Earth where the Covenant attack the city of New Mombasa, repelled with the assistance of the Master Chief. It continues across another ring world, dubbed "Delta Halo", as the crew of the UNSC vessel In Amber Clad attempt to discover the reason for the Covenant's incursion. There, the Master Chief kills one of the Covenant's three High Prophet leaders, which ultimately triggers a civil war inside the Covenant.
Meanwhile, the fleet commander who led the Covenant forces in Halo is stripped of his rank due to his failure to safeguard Halo, and sentenced to death by the Council. The Prophet of Truth calls him from his cell, and rather than have him executed, assigns him the role of The Arbiter, A sort of Commando whose role in the Covenant is to perform daring and almost suicidal missions during times of great need. His first mission, to silence a heretic who doubts the Prophets' teachings, starts him on a path which will make him question his beliefs. When The Arbiter reaches the Heretic Leader, he finds out that he has learned the true intentions of the Prophets from The Oracle, The Monitor of the first Halo. Before The Arbiter can learn more from The Oracle, he battles the Heretic Leader. After the battle, Tartarus, the Chieftain of the Brutes arrives to extract the arbiter and captures The Oracle.
The Master Chief and the Arbiter meet upon the release of the Flood and the discovery of the Prophets' true objective: driven by their ancient religion, they seek to activate Delta Halo, which would cause the death of every sentient being in the galaxy. A mysterious Flood creature called the Gravemind sends the Arbiter and Master Chief in separate directions to prevent The High Prophets from activating Delta Halo.
The Master Chief finds himself upon the nearby Covenant Holy City, High Charity, a gargantuan space station, and pursues the remaining Prophets. After capturing the In Amber Clad, the Flood, led by the Gravemind, arrive on the city and begin to try and capture it. The only remaining High Prophet, Truth, escapes on a Forerunner vessel. The Master Chief stows away on board, but Cortana stays behind in order to detonate the In Amber Clad's engine reactors as a last resort. This will destroy Delta Halo and High Charity, stopping Tartarus from activating it, while preventing the Flood's escape across the galaxy. However, at the end, Cortana not only fails to destroy High Charity, but she also chooses to answer the questions of Gravemind.
Uniting the separatist faction of the Covenant on Delta Halo, and with the help of Sergeant Johnson, the Arbiter succeeds in preventing Tartarus from activating the installation. However, the Halo and its counterparts across the galaxy are left on standby alert, awaiting a trigger signal from "The Ark", whose location is yet unknown, but is believed to be on Earth. Meanwhile, the Forerunner vessel arrives near Earth, with the Master Chief on board. The game ends with a cliffhanger, with the last cutscene showing the Master Chief about to enter the battle to save Earth while Cortana meets Gravemind on High Charity for unknown reasons. The stage is set for the final battles of the Human-Covenant and Covenant civil wars in Halo 3.