Roughly eight months after defeating Dr. Robotnik,^[c] Sonic attempts to help the public as a vigilante-hero to little success. Tom advises Sonic to remain patient for the day his powers will be needed before he and Maddie depart for Rachel's wedding in Hawaii.

Sonic plans to have fun while home alone but is attacked by Robotnik, who has escaped the mushroom planet with the help of Knuckles. To honor his ancestors, Knuckles demands the location of the legendary Master Emerald, an ancient relic that grants its users immense power and the ability to change reality to their will.

Sonic is rescued by Miles "Tails" Prower, an anthropomorphic two-tailed fox who idolizes him and comes to warn him about Knuckles. Sonic convinces Tails to help him find the Master Emerald, while Robotnik reunites with his assistant Stone and, scheming to steal the emerald, offers to help Knuckles. Sonic and Tails follow clues to Siberia on a map Longclaw gave Sonic before sending him to Earth, where they find a compass within an old temple. Robotnik and Knuckles track them and chase Sonic and Tails down a mountain. Knuckles reveals that he lost his father and his whole tribe the same day Sonic lost Longclaw. Despite this brief moment of sympathizing with Sonic, Knuckles and Robotnik steal the compass, though Knuckles begins questioning Robotnik's sense of loyalty and honor when he makes fun of Sonic for choosing to save a wounded Tails instead of the compass.

Tom saves Sonic and Tails by using a ring to teleport them to the wedding. Rachel's fiancé Randall and his wedding guests reveal themselves as undercover agents of the Guardian Units of Nations (G.U.N. for short) and capture Sonic, Tails, and Tom, who are then saved by Maddie and a vengeful Rachel, the latter of whom reconciles with Randall. Robotnik and Knuckles find a large water temple containing the Master Emerald.

Blaming himself for Tails' injuries, Sonic decides to face Robotnik and Knuckles all by himself and goes to the temple, where he fights with Knuckles to keep him from taking the Master Emerald. Seeing this as an opportunity, Robotnik uses the distraction to seize and fuse himself with the emerald, which explodes and sinks the temple into the water. With no use left for Knuckles, Robotnik betrays him and leaves him along with Sonic behind for dead. Working together, Sonic and Knuckles are able to escape just as Tails rescues them in a biplane.

In Green Hills, Robotnik uses his new abilities to create a giant robot resembling himself. Sonic, Tails, and Knuckles work together to fight the robot and its accompanying drones and to reclaim the Master Emerald; however, it breaks, splitting into the seven Chaos Emeralds. Tom and Maddie save Sonic, who uses the Chaos Emeralds to transform into Super Sonic. He destroys the robot, presumably killing Robotnik, before dispersing the Emeralds and reverting to normal. Knuckles fixes the Master Emerald from the remaining shards and makes a pact to protect it from evil with Sonic and Tails. The three start an idyllic life with the Wachowskis.