After settling into a peaceful life in Green Hills with their human family, Tom and Maddie Wachowski, Sonic, Tails, and Knuckles are enjoying some well-deserved downtime. Their tranquility is shattered when a top-secret Guardian Units of Nations facility is breached, freeing a powerful and mysterious hedgehog named Shadow. Having been held in cryogenic stasis for fifty years, Shadow awakens with a singular, burning desire for revenge against the world.

Team Sonic is quickly mobilized by G.U.N. to stop this new threat, but they soon discover that Shadow's abilities far surpass their own. He is faster, stronger, and driven by a deep, personal rage tied to a tragic past involving a young girl named Maria, the granddaughter of the brilliant but unstable Dr. Gerald Robotnik. In a desperate move, Sonic is forced to seek an unlikely alliance with his former nemesis, the now out-of-shape and disgraced Dr. Ivo Robotnik, who spends his days wallowing in failure.

The uneasy partnership takes a dramatic turn with the reveal that Ivo's grandfather, Gerald Robotnik, is not only alive but has also been manipulating events from the shadows. Gerald shares his grandson's manic genius and is voiced by Jim Carrey in a dual role, requiring extensive makeup to portray the 110-year-old scientist. Together, the two Robotniks and Shadow seize control of the Eclipse Cannon, a powerful orbital laser designed by Gerald. Their plan is to use this weapon to execute Gerald's ultimate revenge on humanity for the loss of Maria.

The conflict sends the team on a global adventure, with key confrontations taking place in Tokyo and London. When Shadow critically injures Tom Wachowski, Sonic is consumed by a blinding rage that nearly mirrors Shadow's own desire for vengeance. Stealing the power of the Master Emerald, Sonic transforms into Super Sonic and battles Shadow in a destructive brawl that reaches the far side of the moon. However, Sonic ultimately pulls back from the brink, realizing that giving in to hatred is not the answer. He reaches out to Shadow, helping him remember the kindness of Maria and that revenge will not heal his pain.

The two hedgehogs join forces to stop the Eclipse Cannon. As the weapon begins to self-destruct, Knuckles, Tails, and a conflicted Ivo Robotnik turn on Gerald, who is ultimately defeated. In a final act of heroism, Shadow and Dr. Ivo Robotnik work together to push the exploding space station out of Earth's orbit, apparently sacrificing themselves to save the planet. In the aftermath, Tom recovers from his injuries, and Sonic reunites with his family. A mid-credits scene reveals Shadow is alive, having survived the explosion, and another scene introduces a new adversary, a pink hedgehog named Amy Rose, as she destroys an army of robotic doppelgangers to save Sonic.