Taking place on an undefined island, Dr. Eggman has again begun kidnapping Animals and turning them into robots so he can build the Dr. Eggman Empire. This time however, he has kidnapped Tails and Knuckles too. Learning of his friends' kidnapping, Sonic rushes off to save them. Along the way, Sonic saves a young rabbit named Cream and her Chao friend, Cheese, from Eggman after defeating his EggHammerTankII. Cream then joins Sonic on his adventure to find her missing mother, Vanilla.

Sonic soon rescues Tails from Eggman too, although Tails has no idea what Eggman is up to, and Tails joins Sonic on his mission. When Sonic finds Knuckles, the echidna has been tricked by Eggman into fighting Sonic. After being defeated and chided by Sonic, Knuckles comes with him to get back at Eggman. The heroes eventually track Eggman to his Egg Utopia space station, which they destroy, and Cream finds Vanilla in the aftermath, unharmed.