In 2011, five years after the events of Dead Rising, former motocross champion Chuck Greene is in the fictional casino town of Fortune City, Nevada, to take part in Terror is Reality, a controversial sports entertainment game show where contestants kill zombies for money and fame. Chuck needs the prize money to buy Zombrex (a daily medication that suppresses the zombification process) for his daughter Katey, who was bitten by her zombified mother during a previous outbreak in Las Vegas when she was only 4 years old. While Chuck is backstage after the show, the show's supply of zombies is released; Chuck rescues Katey and makes his way to an emergency shelter, which is sealed after their arrival. Raymond Sullivan (the only security guard to reach the shelter alive) is initially reluctant to let the infected Katey in, but Chuck promises to keep her supplied with Zombrex until the military arrives in three days.
Chuck needs to venture into the post apocalyptic city to find a dose of Zombrex, entering and exiting the shelter via an air duct. Another survivor, Stacey Forsythe (leader of the Nevada branch of zombie rights organization “Citizens for Undead Rights and Equality”, which was in town to protest the treatment of the zombies by Terror is Reality) supplies him with a map and two-way radio; she promises to keep watch on the shelter's security monitors and direct Chuck to any other survivors or points of interest in the area. After returning with the first dose of Zombrex for Katey, a news report implicates Chuck as the cause of the Fortune City outbreak. Chuck tracks down the reporter, Rebecca Chang, at a nearby hotel, and offers her the story of a lifetime if she gives him a chance to prove his innocence and helps him determine who was really behind the outbreak. Following this, Chuck has three main objectives to complete: discover the origin of the Fortune City outbreak by following the “Case File” missions, rescue as many survivors as possible (either from zombies, or from the “psychopath” boss characters), and find enough doses of Zombrex to keep Katey alive until the military arrives.
Chuck and Rebecca discover that Terror is Reality host Tyrone “TK” King is using the outbreak as cover to rob Fortune City's four main casinos. Chuck foils the robberies and prevents the host from escaping in his helicopter. TK is locked up in the shelter, and reveals that another organization responsible for the outbreak paid him to frame Chuck for it. Three days after the outbreak, the military arrives, but a green gas begins emanating from underground and causes zombies to mutate into a more powerful form. The convoy is unprepared to deal with the super-zombies, and is wiped out almost completely. A second military force would normally arrive 24 hours later, but media reports claim that the first convoy reached the shelter and found no survivors, so the city will be cleansed by firebombing at that time. The safe house is also sabotaged, and Chuck must quickly repair the door before too many zombies enter. Regardless of the player's actions, TK is bitten, and needs Zombrex to survive. Rebecca reveals the cause of the gas seems to be in the underground access tunnels, and Chuck finds a hidden facility where pharmaceutical company Phenotrans, the makers of Zombrex, is harvesting the zombies. The drug is manufactured from the queens of the genetically modified wasps that create zombies; the gas released by the Phenotrans facility is intended to increase the number of queens in a zombie horde. After killing the scientists in charge of the harvesting, Chuck recovers a satellite phone and a laptop from the facility and takes them to Rebecca as proof that Phenotrans orchestrated the outbreak in order to harvest more queens, while driving up demand for Zombrex. Just as Rebecca attempts to contact her news station and report the discovery, Sullivan shoots her dead. Sullivan is revealed as a Phenotrans operative; he was the one who let the Terror is Reality zombies out while framing Chuck, and the one who sabotaged the shelter. He escapes with the phone and laptop, and Chuck follows him to a casino rooftop, where he plans to escape by skyhook after revealing that the Vegas and Fortune City outbreaks were necessary to keep a consistent supply of queens to make Zombrex, enraging Chuck as his wife was killed in the Vegas outbreak which led to Katey getting infected in the first place. After a fierce battle, Chuck handcuffs Sullivan's harness to the rooftop, ripping him in half when the recovery aircraft catches the skyhook. Chuck contacts Rebecca's channel and offers to give them proof of Phenotrans' involvement in the Fortune City outbreak if they send helicopters to rescue the survivors.
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