Three years after her first encounter with the biomechanical nightmare, the intergalactic bounty hunter Iria is still operating from a base on Earth. Accompanied by her computerized partner Bob, she now works alongside a fellow bounty hunter named Fujikuro, who is just as cunning as he is resourceful. Their current mission involves hunting down a mysterious and powerful ancient relic known as the Carmarite, an artifact that could revolutionize space travel by making teleportation devices obsolete. While battling a flamboyant group of space criminals to secure this device, Iria receives new support in the form of a combat android. However, unbeknownst to her, this new android was constructed using remnants of the original Zeiram unit, and its core programming houses a new, vicious Zeiram combat life form.

The situation deteriorates rapidly when the android is damaged during a skirmish. The Zeiram unit inside activates, breaks free from its constraints, and begins a relentless rampage. Unlike the previous creature, this Zeiram is a cyborg warrior, its already formidable organic abilities enhanced with deadly integrated weaponry. As panic spreads, the creature traps its prey inside an isolated, alternate-dimensional combat zone, a pocket reality where it has total tactical superiority. Now stranded in this dangerous limbo are Iria, the treacherous Fujikuro (who has his own plans for the Carmarite), and the two hapless but well-meaning electricians from the first film, Kamiya and Teppei, who are once again caught in the crossfire of a conflict far beyond their understanding.

Iria is forced into a desperate cat-and-mouse game with the new Zeiram. The creature is not only physically superior but also possesses terrifying abilities, including extending its hat-like head on a tentacle to attack and absorb the DNA of its victims. As the body count rises within the sealed zone, the initial mission parameters become irrelevant. The search for the Carmarite takes a backseat to sheer survival. Iria must rely on her wits, her arsenal, and the clumsy but brave assistance of Kamiya and Teppei to find a weakness in the seemingly invincible Zeiram. The narrative builds toward a final confrontation where Iria must not only destroy this more powerful version of her old enemy but also prevent the Carmarite from falling into the wrong hands, all while finding a way to escape the collapsing dimensional prison before it is destroyed with all of them inside.