A thousand or so years ago, this volcano bubbles up in the middle of this country and it splits the country in two, creating two unique cultures. One that focuses on technology and artistry and lives in cities (Asylia), and one that is more tribal and lives in the mountains. Asylia has most of the arable land.
Despite their cultural differences/focuses, their level of technology is pretty similar and the Asylians are surprised by this fact early in the game.
At the beginning of the game, the Orokai attack Asylia. The likely reason is to obtain food for their people. The Asylians fight them off and counterattack.
The Diviner believes that the Orokai are the ones who brought the "curse" of the volcano to the land. He wants to destroy them to fix it.
The council resolves to make peace with the Orokai and they set up a meeting at this big bridge that connects the two countries. Rohn and Loden are there along with the head of the council and Kobra Commander's dad.
Before they sign the treaty, Loden kills both Kobra Commander's dad (the leader), the council member, the Skyguard captain, knocks out Rohn out and runs away back to Asylia.
You later learn that Loden did so on the orders of the Diviner, who he is a follower of.
The rest of the Asylians (not knowing the real truth of what has happened), make Loden the new Skyguard captain and through unknown methods, the rest of the council gets killed as well.
The diviner takes over Asylia and mounts an offensive against the capital city of the other side. Rohn obediently but slightly grudgingly follows orders from Loden.
Kobra Commander and his dragon is captured by Asylia around this time. Rohn sets dragon free against orders.
After they win the battle at the capital city and the Orokai city is all but razed to the ground, there are people on the ground running into a building that is supposedly an armory.
Loden orders Rohn to destroy it and he does.
Rohn enters the building afterwards and finds that it was actually a church. He walks up to one of the charred corpses and takes blanket/shawl off of it and finds a dead woman's skeleton holding a baby's skeleton. :'(
Rohn gets pissed. Loden "kills" Rohn and his dragon (who was trying to defend him) when he gets confronted by Rohn.
Rohn doesn't actually die. Gets up and starts to fly his wounded dragon to find survivors of the Orokai. Before they find anybody, dragon dies. :'(
Somehow, Kobra Commander's dragon finds Rohn and takes him to the survivors.
Rohn joins other side. They regroup and counter attack the Asylians.
First they need to rescue Kobra Commander from this prison in an area known as the Maelstrom. Coolest looking environment in the game.
Rescue goes fine and they attack the capital city, and take out Loden and the Diviner.
The volcano erupts and your dragon has to bomb the volcano vents shut otherwise the Asylia capital city will be toast. You do so and the game ends.
Happy bunnies, flowers and well wishes abound. We can live in peace with the Kobra Commander and his people. Rohn becomes King or something.
Everybody lives happily after, unless you're the person who played the game who wants to rip the disc out of your system to run it over with your car and gouge your eyes out for making yourself play through a terrible mess of a game.