The game is set five years after the events of the original Dead Rising. The zombie parasite that originated in Santa Cabeza and caused the Willamette outbreak has spread all over the United States. This is due to the 50 orphans scattered throughout the United States who had been injected with the parasite; subjecting them to zombification and infecting the rest of the US. The game takes place in the fictional Fortune City. The game's protagonist, Chuck Greene, is a former national motocross champion. Chuck will face a number of zombie hordes as well as surviving psychopaths and civilians whom he may choose to save. Among the survivors in Fortune City is Chuck's own daughter, Katey Greene, who was infected in an attack by her zombified mother. Katey serves as Chuck's primary motivation for battling the undead. He tries to earn money to keep his daughter on the infection suppressant "Zombrex".
The game begins as Chuck participates in the violent game show known as "Terror Is Reality", which celebrates the slaughtering of countless undead.The situation begins to deteriorate as the horde of zombies manage to break loose into the city, causing a wide-scale infection. Besides the need to find Zombrex for Katey, Chuck learns from a news report that he is accused of causing the outbreak in Fortune City and that the military will come to capture him in 72 hours. The player has that time to complete the game's story. Chuck decides to meet Rebecca Chang, the news reporter, in the Fortune City hotel to confront her about her source.