In the intro, we see some workers building the Mario Mario's Friends Park, talking to each other, one of them walks away, the other (named Micheal) continues digging, he then finds an ancient talisman, he observes it with curiosity. Suddenly, the eyes on it open, and blood starts flowing from Micheal's eyes, feeling a sharp pain, before dying. We then cut to the sounds of someone getting arrested (Most likely the one that walked away) along with a blurry vision of someone on the floor, blood flowing from them.
We then cut to Matt's dream, he finds a photo of Guilia after some exploring, and then finds a bloody Mario animatronic, saying "You won't be able to play by your own rules anymore." Matt then wakes up, and goes to get a drink of water, but the nightmare continues. We then see Simo in the park, greeting the Mario animatronic, then Matt arrives, they both go to the backstage, since Matt is the son of the park's owner. They then decide to leave, but Matt falls behind after hearing someone.
Simo goes to look for him, only to find him dead, bringing him to tears. He notices the exit has gone missing and then finds an elevator, with a creepy smile. It strange since there is supposed to be only one floor. He goes to the basement to grab supplies for the circuit, he then does some tinkering with it, and the smile disappears. He finds a riddle on the door, saying "The key is in the bathrooms, but beware: just like a lighthouse, you'll see it when you can't see anything else." He then finds said key and unlocks the door, but then he finds a Mario animatronic. His friend group arrives at the park, to search for Matt and Simo, they go to split up to find them, one group soon find a corpse of someone named Francesco, half of his face torn off. The other group finds Matt's sister, Greta (apparently they had no idea Matt had one)
We cut back to Simo and Mario, the Mario animatronic chases Simo down, once he sees his friends, he tells them to hide.
Fun Fact:
When Chapter 2 first started production, the developer had to go back and revise the story, due to the original story having too many plot holes.