The world known as Terra, is a planet covered almost entirely by water. Living on tiny, isolated islands, the people of this world somehow manage to keep civilization alive. With the need to travel from island to island, people have invented air ships, which come in a variety of shapes and sizes. Life goes on but requires one thing to keep it that way, Quantum Refractors.

Below the surface of Terra there exists an entirely different world. This one is dark, ancient, mysterious, and inhabited by dangerous machines known as Reaverbots. The world above and the world below are linked by Sub-Gates, usually small buildings with ladders or elevators that lead down into the underground. Dangers abound in the subterranean ruins, but they must be explored, for that is where people obtain the highly sought after Refractors.

Those who dare enter the world of the Reaverbots to retrieve the Refractors, are known as Diggers. Diggers keep the world supplied with enough Refractors to keep civilization going. A Digger's means of traveling is of course by air ship, which can take them to just about any ruin in the world. However, air ships also consume the power of the Refractors and so the ravaging of the ruins goes on and on.

Eventually, there came to be people who would seek Refractors for their own profits as well as steal Refractors from other successful Diggers. These people also use air ships to travel from place to place and are called Air Pirates...

The game's story begins in just one of many underground ruins. Our hero, Megaman, is a Digger who has just obtained the Refractor held within these ruins. Ready to leave, his best friend and Spotter, Roll, guides him out. On the way, Megaman comes across a huge Reaverbot, the boss of these ruins who does not want the Refractor taken. Megaman battles the Reaverbot until it is beaten and shuts down. Now he makes his way to the surface but Roll, in control of their air ship, the Flutter, is nowhere to be seen. As he stands waiting, Megaman suddenly turns to find the large Reaverbot has followed him to the surface, ready for a rematch fight. Fortunately Roll shows up just in time to help Megaman make his escape and they take off, leaving the Reaverbot and the ruins behind.

While flying through the sky, Megaman and Roll's conversation is suddenly disrupted by a distressed voice. Barrel Casket, Roll's grandfather informs them that the Flutter is having engine trouble, and soon it becomes evident they will crash if they do not hurry and land somewhere to make repairs.

The nearest island is called Kattelox. Roll steers the Flutter to head them there as fast as possible. As they crash land, the Flutter's rudder busts off, and the entire air ship goes skidding across the land some distance before it finally stops.

Now they are stuck on Kattelox until the Flutter can be repaired. The local police drive out to make sure everyone is okay, and to welcome them to the island. Soon after, there come reports that Air Pirates are heading to the island to steal the legendary treasure supposedly buried there...