The start of the game features an anthropomorphic recreation of the Battle of the Denmark Strait, where the personification of famed British battlecruiser HMS Hood is sunk by characters representing the German forces. The game features an eponymous military alliance, the "Azur Lane", formed and comprised by the nations of Eagle Union (United States), Royal Navy (United Kingdom), Sakura Empire (Empire of Japan), Iron Blood (Germany), Dragon Empery (Republic of China), Northern Parliament (Soviet Union), Iris Orthodoxy (France), and Sardegna Empire (Kingdom of Italy). The alliance split in two because of an alien intervention, with the Iron Blood, Sakura Empire, and Sardegna Empire forming the opposing "Crimson Axis" faction. Using technology provided by the aliens called as "Sirens", the Crimson Axis invades their former allies. As the result many Azur Lane's territories came under occupation of the Crimson Axis, with the Iris Orthodoxy was split into Iris Libre (Free France) and Vichya Dominion (Vichy France).

The rest of the game's main plot partially follows the United States naval engagements in the Pacific War. Chapters represent several decisive battles of the war including the Battle of Midway, the Naval Battle of Guadalcanal, and the Mariana and Palau Islands campaign.