Homeworld 2 continues the struggle of the Hiigarans and their leader Karan S'jet.
During the events of the original game, the Kushan race of the planet Kharak began a quest to discover and reclaim their home planet. The Kushan discovered the wreckage of the Khar-Toba, an interstellar transport, in a desert on Kharak, and inside found a galactic map etched on a piece of stone. From this the Kushan concluded they had been transplanted to Kharak some time ago. To reclaim their home planet—"Hiigara"— the Kushan built an enormous self-sufficient Mothership to carry 600,000 people on a crusade to reclaim Hiigara. This led to the engagement and eventual defeat of the Taiidan Empire which exiled them.
The story continues that some time later, the Khar-Toba was found to contain one of the Three Hyperspace Cores, left behind by a so-called Progenitor race, which eventually allowed hyperspace travel. The First Core was possessed by the Bentusi: a powerful and enigmatic race of traders who assisted the Exiles (the campaign can be played using Kushan or Taiidan craft in the original game) during the first game. The third was lost until approximately one hundred years after the Exiles reclaimed Hiigara, found by a Vaygr Warlord named Makaan, who used it to conquer much of the galaxy and—as of the beginning of Homeworld 2—began attempts to capture Hiigara. The story states that religious beings of the galaxy consider the discovery of the Third Core to announce the End Times, during which Sajuuk, thought to be an immensely powerful being, will return.
The game begins with the commissioning of a new Mothership, the Pride of Hiigara, similar in shape and design to the original Mothership and commanded by Karan S'jet, as in the original game. The ship is attacked by the Vaygr during the final stages of construction but escapes. The Bentusi inform the Hiigarans that they must find Balcora Gate, left behind by the Progenitors, behind which is something essential for stopping either the Vaygr threat, the End Times, or both. Makaan learns of and reaches the location as well, and the game's penultimate mission takes place on the other side of Balcora Gate, where Hiigarans and Vaygr alike discover an enormous Progenitor starship, named Sajuuk, with sockets for the Three Hyperspace Cores. After defeating Makaan the Hiigarans combine the Vaygr, Hiigaran and Bentusi Cores (recovered from the wreckage of the last of the Bentusi ships) within Sajuuk, and use it to defeat the leaderless-but-still-dangerous Vaygr invasion; Sajuuk is later found to be the key to a galaxy-wide network of hyperspace gates, ushering in a new age of trade and prosperity for all civilized races in the galaxy.