The plot begins when Bruce Wayne is imprisoned in Arkham City, an isolated area of Gotham that has been turned into an open prison under the control of Professor Hugo Strange. Strange knows Batman's identity and plans to activate Protocol 10, a mass extermination plan for the inmates. Meanwhile, the Joker, poisoned by his own Titan formula, infects Batman with his blood, forcing him to find a cure.

As Batman investigates, he faces many iconic enemies such as Two-Face, Penguin, Mr. Freeze, Harley Quinn, Riddler, and Ra’s al Ghul. The story culminates with the revelation of Protocol 10 as a genocide plan and the final battle with the Joker, who dies when the cure is destroyed. The game ends with Batman carrying the Joker's lifeless body out of Arkham City, in one of the most dramatic scenes of the series.