Under threat of an approaching Imperial invasion, the inhabitants of Bruhl are forced to evacuate under the protection and assistance of the Bruhl Townwatch. Alicia, a member of the Townwatch, arrests Welkin Gunther at gunpoint on suspicion of espionage, despite his protestations of innocence. Welkin manages to escape and Alicia gives chase, still convinced that he is an Imperial spy. During the chase, both of them are spotted by Imperial scouts and fired upon. The two retreat to the safety of the Gunther estate in the Bruhl countryside, where they meet up with Welkin's Darcsen foster-sister Isara. Imperial troops and tanks arrive and surround the estate.

Using the tank from the barn, Isara, Alicia, and Welkin break out through the enemy line, and reunite with the Town Watch in Bruhl. Alicia tells the Town Watch they need to hold out against the Imperial Army until the regular Gallia military arrives.

In the militia, Welkin gets assigned command of his own squad, number 7, and his request for the Edelweiss and Isara to join him is approved. To her surprise, Alicia is placed under his command as a non-commissioned officer, and the two run into Faldio, one of Welkin’s university friends.

Alicia and Welkin undertake deep reconnaissance in territory held by the Imperials but are forced to take shelter in an abandoned cabin after a freak snowstorm comes. During the night, a single Imperial soldier enters the cabin and threatens use a live frag grenade to force them to surrender. Alicia, however, is able to convince the soldier to lower his weapon so she can treat his gunshot wounds. Meanwhile, everyone in Squad 7 begins to feel worried as Alicia and Welkin have not returned from the reconnaissance. At the cabin, the wounded soldier explains that he joined the Imperial army to have a better life but grew disillusioned and was shot by his comrades while attempting to desert. Moved by Alicia's compassion, he re-inserts the safety pin in his grenade, rendering it inert. Before the soldier passes away, he tells them his name, Mikhail Weber. Alicia and Welkin reunite with Squad 7 after giving Mikhail a burial.

The Gallian militiamen, led by Welkin and Faldio, and the Darcsen guerrillas led by Zaka began to assault Imperial positions in Fouzen. Although there was some initial success in overwhelming Imperial forces and rescuing the Darcsen prisoners, Gregor and the Equus, as well as some surviving Imperial soldiers and tanks, are able to mobilize to rout the invasion attempt. When the Equus is lightly damaged by planted explosives at the railway tracks, Gregor issues an ultimatum for the Gallians to withdraw from Fouzen or face the death of innocent Darcsens at their hands. When Faldio issues the order to attack, the Equus fires its cannon at the Darcsens. Isara and Ramal, who are in a hijacked Imperial tank, attack the Equus and eventually destroy it. Even though the operation was a success, the militiamen and the guerrillas' morale is down due to the deaths of the Darcsens civilians, killed by anti-personnel munitions. Rosie is traumatized, remembering the deaths of her parents at the hands of heavily armed gunmen years ago as a child.

After their defeat at Fouzen, the Imperials realize that war is turning against them, and if they do not regain their momentum, they will be pushed out of Gallia. Maximilian has a plan, but does not divulge the details to Jaeger. Meanwhile, back in Gallia, the Militia is put on alert due to suspicious Imperial movements. At camp, Largo notices the romantic tension between Welkin and Alicia. He takes Welkin to a makeshift bathhouse and tells Welkin that he was in a similar situation. During the previous war, he was caught in a love triangle between his best friend and Elaine Varrot, which ended when his friend sacrificed himself in battle and warns Welkin not to repeat his mistakes. Meanwhile, Isara goes to town for some shopping and Ramal decides to accompany her. Later that night, Alicia confronts Welkin and tells him about Faldio's declaration of love for her. She asks Welkin what he really thinks of her, and what he thinks she should do, but Welkin refuses to involve himself, claiming that he doesn't want to hurt Faldio.

Welkin and Squad 7 pay their respects to Isara at her funeral. For her role in the Mulberry Coast victory, the Gallian military posthumously awards her the rank of Master Sergeant. Welkin orders Squad 7 to quickly move on and focus on dealing with the Imperials despite their grief which Ramal accuses Welkin of not caring about his sister's death. Rosie suffers from Survivor guilt in not being able to save Isara. General Damon demands Welkin give him the details on making the smoke shells in three days or be punished. Alicia later discovers that the rest of Squad 7, angered at Damon's actions, plan to ambush him with a hidden hole on the ground to trap him. However, Faldio manages to convince them otherwise, saying that the best way to humiliate people like Damon is keep winning battles and save Gallia. Faldio confronts Welkin about his refusal to deal with the death of Isara and Alicia's feelings, prompting Faldio to punch him.

Led by Selvaria, the Imperials continue to press the attack, repeatedly destroying the Gallian forces. Not even Squad 7 is able to stop her. Meanwhile, back in the camp, a desperate Faldio takes Princess Cordelia hostage and seizes her Ragnite shield and lance. He reveals Alicia's Valkyria ancestry to Cordelia and tries to wake Alicia, but has limited success. It is only when Welkin's desperate call for retreat over the radio is heard that Alicia begins to react. Taking Cordelia's shield and lance, Alicia faces Selvaria on the battlefield. She defeats Selvaria and begins attacking the Imperial forces, destroying the Batomys in the process. Caught off guard by the appearance of a Valkyria on the Gallian side, Jaeger orders all Imperial forces to retreat. Selvaria rescues Maximilian from the ruined Batomys and withdraws from the battle. As the Gallians celebrate their unexpected victory, Welkins runs toward Alicia as she suddenly falls unconscious.

With Alicia on their side, the Gallian Regular Army scores numerous victories over the Imperials until they are pushed to their final stronghold in Gallia: Ghirlandio. Knowing his failures will be exploited by the Emperor and the Crown Prince, Maximilian declares that he is no longer the Second Crown Prince of the Empire, but the Emperor of his own nation that he will create. Selvaria is still troubled by her failure at Naggiar, but still believes in Maximilian out of devotion and love. Meanwhile, at the Gallian camp, Welkin and Squad 7 are trying to contact Alicia, but are stopped by Regular Army officers. Squad 7 attempts to force the issue, but instead cause a brawl. Cordelia pardons Faldio, and then meets Alicia where Alicia requests that Cordelia ensure the safety of Squad 7 and Faldio until the end of the war. To fulfill her promise to Alicia, Cordelia requests Squad 7 to stay behind to be her personal guard. Alicia and the Gallian Regular Army travel to Ghirlandio, where they advance against Selvaria and the Imperials.