The game begins when an electromagnetic surge from an uninhabited island called Katorga-12, once held by the Soviet Union, damages an American spy satellite. A group of American soldiers, which includes the protagonist, Captain Nathaniel Renko, goes to investigate, when another surge disables their helicopter. After they crash land on Katorga-12, Renko begins to phase between the present and 1955, the date of a catastrophic accident on the island. He arrives in 1955 in time to save a scientist named Nikolai Demichev from dying in a fire. As he rescues Demichev, a man tries to warn Renko not to save him; the man is then killed in the fire.
Back in the present, Renko discovers that Demichev has taken over the world. He is captured by Demichev's soldiers, but is rescued by Katheryn, a member of a resistance group called Mir-12. Based on a journal they found on Katorga-12, they believe that Renko can put an end to Demichev's reign using a time manipulation device called the TMD, developed by Victor Barisov. Barisov was killed by Demichev long ago, so Renko uses the TMD to save Barisov.
Back in the present, Renko and Barisov determine that they can set history right by returning to 1955 and destroying Katorga-12 with a bomb made from Element-99, the material that caused the catastrophic accident in 1955. Renko and Katheryn manage to find such a bomb, but Katheryn is lost as they retrieve it. They use the bomb to destroy the island, and thus, the research facility that Demichev used to become so powerful.
Back in the present, Renko finds Demichev holding Barisov at gunpoint. Demichev reveals that he rebuilt the facility after it was destroyed, so that history remained unchanged. Barisov realizes that it was Demichev's rescue that changed history, so he asks Renko to go back and stop his past self from saving Demichev. Demichev, in turn offers Renko a place in his empire in exchange for the TMD. He also points out that Barisov's plan has failed before – the mysterious man who told Renko not to save Demichev in 1955 was Renko himself.
At this point, the player has a choice. If Renko shoots Demichev, he goes back in time to stop himself from saving Demichev in the first place. In order to do so, he decides to kill his past self. In the epilogue, it is implied that Barisov recovered the TMD and used it to conquer the world himself. If Renko instead shoots Barisov, he and Demichev rule the world together. After some time, Demichev begins to fear Renko's growing power, and a cold war develops between the lands ruled by Renko and those ruled by Demichev. If Renko shoots both Demichev and Barisov, Renko allows the world to fall into chaos. Later, he rises up as a new world leader, using the TMD to assert his power.
A scene then shows a wounded Katheryn, pulled into 1955 by a time distortion, writing the Mir-12 journal which will later be used to track down Renko.