The Smash Mansion lockdown protocol disrupts the tournament. Trapped in the mansion with an attacker among the fighters, Mario, Sonic and Jacob team up with The Phantom Thieves who rise once again. Meanwhile, The Investigation Team has to get Hazel back to her friends.

After the events of Episode One, Mario establishes a link back to Smash Mansion and the new team visits. During the visit however, The final fighter is revealed, creating a massive rivalry between a few fighters. When the rivalry goes too far, a new tournament starts up. It's an all star tournament of heroes versus "Bad-Anon." Who wins, who loses?