As the Knights activities make the evening news, a strange man named Nazumi wanders the city with machines strapped to his body. People on the WIRED are asking: ""Who is Lain"". Meanwhile, the two MIB agents take Lain to the Techibana offices where Lain's identity is challenged by a man; how well does she know her parents, her sister, herself? Can Lain answer him?

Lain struggles with her identity. Is she a human being, or just a hologram? And are the Knights responsible for the Evil Lain? Lain decides to deal with the Knights once and for all.

Troubled by what she saw, Alice decides to visit Lain at home and find out what is going on. Meanwhile, the two MIB agents receive a terrible shock and Eiri reveals his real motive for removing the barrier between the real world and the WIRED.

The world is crumbling, people are dying and Alice's sanity is threatened. To save humanity, there is only one thing Lain can do; she must make the ultimate personal sacrifice.