Sonic's story begins at night in Station Square, where he encounters and battles Chaos Zero, a mysterious liquid enemy. The next day he sees Tails crash in his plane in Emerald Coast and rescues him. Together they go to Mystic Ruins where they see Eggman in his Egg Hornet. Eggman takes Tails' emerald and gives it to Chaos, then both leave.
Sonic and Tails set off to find the chaos emeralds before Eggman does. They collect one by going to Windy Valley. They head for Station Square that night to get the emerald from Casinopolis. After getting that one, they find the Ice Key and head back to Mystic Ruins to get the emerald in Ice Cap. Afterwards, they see Knuckles at the lake and battle him, and end up losing the emeralds to Eggman, who gives them to Chaos. Eggman leaves the three to battle Chaos 4.
The duo head back to Tails' workshop and give chase to Eggman's Egg Carrier in a gun-shooting Sky Chase. The plane gets shot down, and Sonic lands in Station Square. He sees Amy Rose and the Flicky she is guarding, as well as the sentry robot ZERO. Amy runs into Twinkle Park, and Sonic follows. He loses her, and goes searching for her on Speed Highway.
By the time Sonic gets out of there, he sees Amy has been captured by ZERO. He follows them to Mystic Ruin, but they are beamed aboard Eggman's ship. He gives chase by traveling through Red Mountain. He is a moment too late, but Tails comes flying by in the Tornado II and gets him, which leads to Sky Chase 2. This time, they take out the ship's huge cannon and make it aboard, and head through the perilous Sky Deck.
When Sonic makes it through, Eggman takes the emerald from Amy's Flicky and summons E-102y to battle Sonic. Amy stops Sonic from destroying E-102 because she feels E-102 is a friend. The Egg Carrier begins losing altitude, so Sonic sends everyone off and goes to battle Chaos 6. After the battle is won, Sonic chases Eggman off the ship and plummets down, landing in the jungle of the Mystic Ruins. He sees the glowing ball of light that is Tikal, and follows it into the Echidna temple, running through the perilous Lost World.
After this level, he sees a mural of Perfect Chaos destroying a city and Tikal shows him a vision of Tikal's past. He leaves the temple and sees Eggman, and follows him to his base, Final Egg. Making his way through, he has a final showdown with Eggman in the Egg Viper. He wins, and Eggman flies off.