After handling a rogue SOLDIER, Sephiroth and Zack receive orders from Shinra to investigate an older Shinra research mansion and a Mako reactor near Nibelheim. Upon investigating the mansion, Sephiroth discovers his disturbing origins were an integral experiment in the Jenova Project. Sephiroth' who still believes Jenova is his mother eventually comes to believe that he is the last of the ancient Cetra people. Sephiroth, essentially disturbed to the point of emotionally-driven madness, destroys Nibelheim and embarks to retrieve his "mother."

Zack pursues after Sephiroth and arrives at the reactor to stop him, only to be soundly defeated. While finally liberating Jenova from the Reactor, Sephiroth is caught off-guard and stabbed from behind by Cloud, who is armed with Zack's Buster Sword. Sephiroth exits the chamber with Jenova's severed head while Cloud follows. After dispatching Cloud (not fully probably because of the stabbing injury), it appears that Sephiroth leaps into the reactor core where he travels the Lifestream to the Northern Cave. There, he plots to absorb the planet's energy in attempt to achieve godhood, while the world believes him to be dead.