"Mobile Suit SD Gundam's Counterattack" is a comedic parody of the "Mobile Suit Gundam" franchise, reimagining its characters and mecha in a super-deformed (SD) style. The narrative centers on the conflict between the Earth Federation and the Principality of Zeon, but with a lighthearted and exaggerated tone. Char Aznable, the series' primary antagonist, seeks to drop the asteroid Axis onto Earth to force humanity into space, a plan echoing the events of "Mobile Suit Gundam: Char's Counterattack." However, the SD format transforms the stakes into absurd and humorous scenarios.

Amuro Ray, the protagonist, pilots the iconic RX-78-2 Gundam to oppose Char's schemes. The story incorporates slapstick comedy, with characters engaging in exaggerated battles and comedic misunderstandings. The rivalry between Amuro and Char is a central focus, but their interactions are played for laughs rather than dramatic tension. Supporting characters, such as Bright Noa and Sayla Mass, also appear, contributing to the chaotic and whimsical atmosphere.

The plot unfolds through a series of episodic skits, blending parody with references to the original "Gundam" series. The SD Gundams, with their chibi-like designs, engage in over-the-top battles, often breaking the fourth wall and subverting expectations. The narrative does not aim for continuity or depth, instead prioritizing humor and fan service for viewers familiar with the "Gundam" universe. The series serves as a comedic homage to the franchise, offering a playful reinterpretation of its iconic characters and themes.