In 2012, the Seventh Chairman of the Omi Alliance is terminally ill with lung cancer. Fearing that a newly installed Eighth Chairman might seek war with the Tojo Clan, the Tojo's Sixth Chairman, Daigo Dojima, has been traveling around Japan to form alliances with smaller yakuza families from around the country, in the hopes of dissuading the Omi from war.

After his latest business meeting with Tadashi Madarame, Patriarch of the Fukuoka-based Yamagasa Family, Daigo leaves behind his bodyguards and gets into a cab being driven by his mentor and former Fourth Chairman of the Tojo Clan, Kazuma Kiryu. He relays his fears about the coming alliance talks and the possible war to Kiryu, seeking advice. Kiryu, however, tells him he must forge the path ahead on his own.

For the sixth months preceding his meeting with Daigo, Kazuma Kiryu had been living in Fukuoka under the alias of "Taichi Suzuki", working as a taxi driver for the Nagasu Taxi Company. Kiryu had left behind his life running the Sunshine Orphanage in Okinawa, since his adoptive daughter, Haruka Sawamura, had begun a career as a rising pop star, and he feared that her career would be ruined if the public discovered she'd been raised by a former yakuza.

On the night of his meeting with Daigo, after his shift is over, Kiryu goes out drinking with his boss, Youtaro Nakajima, and ends up having to save him when he gets into a fight with two Yamagasa Family thugs who'd been disturbing the hostesses at the club where they'd been drinking. After dropping his boss back at his home, Kiryu returns to his apartment and spends the night with his girlfriend, a local hostess named Mayumi.

A few days later, after taking a few fares and dealing with an illegal gang of street racers, Kiryu is confronted outside the taxi company by Daigo Dojima's bodyguards, Yu Morinaga and Masato Aizawa. Both men know of his true identity and demand to speak with him. Despite initially refusing, Kiryu acquiesces when both men reveal that Daigo Dojima went missing after his talk with Kiryu.

The two Tojo men question Kiryu about his encounter with Daigo. They also warn him that the Chairman's disappearance has caused a rift between the Tojo and the Yamagasa Family, and war is threatening to break out between them, since the Tojo's interim chairman, Minoru Aoyama, suspects the Yamagasa may have kidnapped him. Kiryu insists that he does not know what became of Daigo, but neither one of the men believes him. Morinaga and Aizawa attack Kiryu to try and get more answers from him, but are unable to beat him. Kiryu insists that he does not know any more than they do and leaves.

A couple days later, Kiryu is stopped in the street by proclaimed Detective Kazuhiko Serizawa of the Osaka Prefecture Police. Serizawa claims to be in town to keep tabs on Masaru Watase, Patriarch of the Omi Alliance's Watase Family, who inexplicably travelled to Fukuoka a few days before Daigo's disappearance. He suspects that Watase may have kidnapped Daigo to sabotage the Tojo's alliance with the Yamagasa so he can court the Yamagasa into joining forces with the Omi instead. He warns him that two Tojo soldiers, Morinaga and Aizawa, suspect the same and may make a move on Watase, which could spark a war.

Despite hesitating in intervening, Kiryu seeks out Watase at a local hostess club and confronts him about Daigo's vanishing. Watase recognizes Kiryu and claims that he came to Fukuoka to seek him, not Daigo. Watase is certain that he will be the next chairman of the Omi Alliance and wants to go to war with the Tojo Clan, but he wants the Tojo to be led by somebody he considers a worthy rival: Kiryu. Watase tries to goad Kiryu into a fight, but Kiryu refuses and departs.

Outside the club, Kiryu is confronted by Morinaga and Aizawa. Kiryu tells them that he does not believe Watase is responsible for Daigo's disappearance, but instead that interim Chairman Aoyama is probably behind it, since Watase also revealed that Aoyama had been secretly feeding him information on Kiryu and Daigo's movements prior to his arrival.

The trio travel to the Yamagasa Family headquarters, where Aoyama is meeting with Patriarch Madarame. As it turns out, Kiryu's suspicion was correct. When the group arrives to the meeting room, Aoyama shoots Madarame, his guards and Morinaga. He reveals that he intends to take over the Tojo Clan, go to war with the Yamagasa and take all their territory so they can have enough resources to defeat the Omi Alliance. When more Yamagasa men arrive, Aoyama frames Kiryu for Madarame's shooting and uses this as an opportunity to escape. Kiryu fights the Yamagasa Captain, Yahata, along with all his men, while Aizawa gets Morinaga to the hospital. After escaping from the Yamagasa headquarters, Aoyama sets off a bomb he'd left behind, destroying the building but failing to kill Kiryu, since he'd already escaped.

A battered Kiryu returns to his apartment, where another surprising revelation awaits him: His girlfriend, Mayumi, reveals that she'd been spying on him this whole time for her father: Patriarch Madarame. She takes him to meet with her father, who survived Aoyama's attempt on his life. The Yamagasa Patriarch reveals that he'd had his daughter keep an eye on Kiryu since he arrived to Fukuoka to ensure that he wouldn't cause trouble. Madarame also reveals that Daigo has not been kidnapped, but rather that he fled the city with Madarame's help and has gone into hiding, since he knew traitors within the Tojo Clan were plotting against him.

The Patriarch tells Kiryu that he intends to dissolve the Yamagasa Family, since a war with the Tojo is one they cannot win and he wants to keep his men from being killed needlessly. However, Kiryu dissuades him and proposes a different solution. Afterwards, Kiryu tracks down the Yamagasa Captain, Yahata, and tells him of his meeting with Patriarch Madarame and his plan to stop the war between his family and the Tojo. At Kiryu's request, Yahata calls Aoyama and goads him into a confrontation between Tojo and Yamagasa forces the following night.

At the appointed time, the Yamagasa and Tojo forces meet for battle at the Fukuoka docks, with Yahata, Aoyama and Watase all present. Before the fighting can begin, Kiryu intervenes and, as a living Tojo Chairman, orders the Tojo's forces to stand down, threatening that any of them who refuse to surrender will have to fight him instead of the Yamagasa. Though most of the Tojo's forces are intimidated by Kiryu's legend and stand down, several dozen refuse and attack him.

After an extended battle, Kiryu manages to defeat fifty of the Tojo's men all by himself. A horrified Aoyama tries to shoot him, but Watase stops him, since he refuses to allow Kiryu to be killed before he can fight him. While Kiryu beats him, Aoyama lets slip that somebody else had instructed him to go to war with the Yamagasa Family. However, before he can reveal his backer's identity, he is shot in the head by Morinaga, who is revealed to also be a traitor. Kiryu tries to question Morinaga, who states that Aoyama had been their pawn but had ultimately betrayed the cause by shooting Morinaga. Morinaga flees, claiming that he killed Aizawa.

Two days later, Kiryu is once again stopped in the street by Detective Serizawa. The Detective has learned of what happened at the docks and asks if Kiryu will go to Tokyo to aid the Tojo Clan. When Kiryu claims he won't, Serizawa tells him that he's learned something that might change his mind: His old friend, Goro Majima, has been killed in Sapporo and now the Tojo Clan is without either of its major leaders.