The game is set in a fictional city on the Atlantic coast in the United States named Metro City (analogous with New York City). According to the game's intro, in the 1990s (or 1989 in the Japanese version), the city's crime rate reached alarming levels, but since the election of pro wrestler turned politician Mike Haggar as the new Mayor, Metro City was changed and cleaned up drastically. Under his term, Haggar managed to suppress the crime rate of the city to its lowest points. While the citizens of Metro City were thankful for Haggar's hard work in curbing crime, the Mad Gear Gang, who had served as the dominant criminal organization of Metro City, would not go down so easily. Under the leadership of the crooked businessman Belger, the group attempted to bribe Haggar with a large payoff to keep him from going after them, to which Haggar refused. Still determined to bring Haggar under their rule like the last mayor before him, Mad Gear proceeded to kidnap his daughter Jessica and create further unrest among the citizens. When Haggar finds out about his daughter's abduction, he becomes furious and decides to take his fight against Mad Gear to a personal level. Seeking additional manpower, Haggar recruits Cody Travers: an expert fighter and Jessica's boyfriend, as well as Guy: a ninja in training and Cody's good friend/rival. The three dedicate themselves to the complete eradication of the Mad Gear Gang, and to rescue Jessica from their clutches.