The demon known as The Sleeper has been banished and the magical barrier around the prison mining colony on the isle of Khorinis destroyed. The nameless hero who accomplished this, however, had to pay a high price: he lies buried under a pile of rocks. Shortly afterwards he is revived by the renegade mage Xardas. A new threat is rising: evil armies, led by dragons, are gathering in the old mine valley. Someone has to take the news to the people of Khorinis and help them in defeating this menace. But the people have their own problems: the war against the orcs is still raging on on the mainland, and the king has sent his paladins to Khorinis to make sure that the mining of the magical ore continues, now that the prisoners have fled the mine. Many of the former prisoners have now become mercenaries, hired by the farmers on the island, who refuse to obey the king and his minions any longer. Violent conflict seems inevitable.