Flash backwards to several years before the vicious battle against the empire in Panzer Dragoon 1. In the country of Machania, dragons are bred for the exclusive use of the dragoons, or Knights. Dragons with wings are normally executed as they are deemed to be a bad omen by the citizens. In the war with the Empire, Machania has begun to examine the ancient ways rather than to try to fight a futile war using technological advances. The Empire is technologically more advanced. Randy, the hero, and his newfound friend, the dragon he saved, want to turn the tide of battle.