A long era of peace has gone by in Britannia, with no great threats disturbing the lives of the people. Yet, something is amiss in the land. Magic seems to be dying, with mages becoming mad. The people are unhappy, and feel spiritually-empty and betrayed in life. A new sect called "The Fellowship" expands its membership in the lower classes, and secures influence through their prominent members who ascend to leading positions in society.

The Player again is the Avatar. One evening, a demonic, red face appears on the Avatar's computer screen on Earth, and declares its impending rule over Britannia. Alarmed, the Avatar consults the circle of stones, and finds a moongate already waiting to send the hero to Trinsic. Upon arrival, it transpires that a brutal murder has occurred. Investigating, the Avatar learns of similar past murders, and directly encounters further such killings throughout their travels.

The Fellowship becomes incrementally more suspicious -- in particular their leader, Batlin. Furthermore, a mysterious voice appears periodically to give the Avatar dubious guidance. Finally, after many perils the Avatar is reunited with the Time Lord, who reveals the true nature of recent events: The Fellowship is the puppet of the red-faced being, the Guardian.

The Guardian has put in motion a plot to enter Britannia through a Black Moongate and uses three blackrock Generators to spread his influence preceding his arrival. The Avatar destroys the Generators, then hurries to the Isle of the Avatar to intercept the completion of the Black Gate. In a brutal battle with Batlin and the elusive murderers, the latter are brought to justice while the former escapes by teleportation. Just before the Guardian can come through, the Avatar destroys the Gate.

Britannia is saved at the cost of the Avatar being stranded in the realm with an ominous threat of further turmoil and destruction left by the Guardian. Thus, the Age of Armageddon begins, continuing in Ultima Underworld II and Ultima VII, Part Two: Serpent Isle.