Three decades after the great war between the humans and the Zentradi, in January 2040, the U.N. government is developing new technologies to use in their transforming fighter aircraft by running tests on the colony planet Eden. Military test pilots and former childhood friends, loose cannon Isamu Alva Dyson and the Zentradi mixed race Guld Goa Bowman, are selected to each pilot a new aircraft (Shinsei Industries' YF-19 and General Galaxy's YF-21) for Project Super Nova, to choose the newest successor to the VF-11 Thunderbolt variable fighter, which is currently still in use by the U.N. Spacy military forces. Their personal grudges end up disrupting the tests and begin to wreak havoc on the program.
Their rivalry heats up when a mutual friend, Myung Fang Lone, shows up. Myung was a childhood friend of both pilots, but the three of them had a falling out and quickly grew apart. This is alluded to throughout the story, and evidence of the strained relationship between Myung and either of the two men is apparent, while their distaste for one another is obvious. When they meet again, they discover that Myung is now the producer of Sharon Apple, the hottest entertainer in the galaxy, who just happens to be an AI hologram. Unbeknownst to the public, the Sharon AI is incomplete and requires Myung to provide emotions during concerts.
During a testing session, Guld and Isamu finally face off against each other, and an all-out fight begins as each tries to best the other. Despite being in the middle of a testing area, they quickly proceed to tear the surrounding area to shreds in their fight to gain superiority over the other. Having turned off their communications equipment, both pilots fight using the test aircraft in a series of stunning dog-fight maneuvers before going into battroid form and finishing the fight on the ground. In the process, an "accidental" gun pod discharge injures Isamu, and he is taken to the hospital, where he awakens to Myung standing watch over him. After returning to duty, a military tribunal questions Guld about their fight in the test area, but ultimately the decision is left up to the Admiral in charge of the project. Chief Millard, the station commander of New Edwards Test Flight Facility, reluctantly tells both pilots that their mission and the project have been scrubbed by the U.N. Spacy High Command due to the completion of a newer, and previously unknown aircraft, the Ghost X-9, an advanced stealth UCAV prototype which was secretly being produced on Earth while two other prototypes (YF-19 and YF-21) were simultaneously being tested for Project Super Nova on planet Eden. With the Ghost X-9 completed, testing on the YF-19 and YF-21 was halted indefinitely, since the higher-ups believe that the new unmanned fighter is superior in every way.
Meanwhile, the AI Sharon Apple has developed a malevolent consciousness due to an illegal bio-chip installed by the lead scientist on the project, Marge Gueldoa. During her concert in the Atlantis Dome inside Earth's Macross City, Sharon quickly takes over both the Ghost X-9 and the SDF-1 Macross Fortress and hypnotizes her audience and the Macross' staff, while trapping Myung in the Macross itself.
Wanting to prove that manned fighter units are a necessity and to prove his worth, Isamu and Yang (the YF-19's engineer) take the fighter jet and space-fold to Earth to beat the X-9 at its own game, while Guld gives chase in the YF-21. Sharon hacks into Earth's outer space defenses, but both Isamu and Guld make it through. They then proceed to attack each other again as they argue about childhood grudges. At the climax of the fight, Guld, finally achieving a target lock, releases a large fury of missiles seemingly destroying the YF-19. As this happens, Guld is flooded by repressed memories, now realizing it was truly his own jealous rage that had torn the friendship apart. Having saved himself and Yang by cutting engine throttle and gliding, the YF-19 then appears in the skies above Guld, and the two old friends reconcile.
When discovering that Myung's life is in danger, Isamu and Guld quickly go to her aid. While Isamu goes after Sharon, Guld fights the X-9 and ultimately destroys it by removing the gravitational safety limiters on his aircraft and matching the X-9's velocity/maneuverability, which is much higher than normally possible due to it being computer-controlled and having no pilot, until he achieves a target lock and shoots the X-9 down. However, removing the limiters allows Guld to achieve accelerations exceeding human (even Zentradi-Human) limitations, which ultimately leads to his death, the g-forces generated by his piloting literally crushing him even as he crashes the YF-21 into the X-9, destroying it.
While fighting the SDF-1 Macross, Sharon hypnotizes Yang, who shoots at Isamu but only hits his helmet. Isamu ejects Yang but is then hypnotized by Sharon's voice and is left to crash to his death. At the last second, Myung's voice reaches him and brings him back to consciousness. Dodging the Macross' fire, Isamu is able to destroy the central computer, effectively eliminating Sharon.
The story ends as the sun rises over the Macross Fortress, with Myung waving to Isamu, who has survived the destruction of Sharon's computer.
Eventually, the U.N. government banned all AI technology developments after the incident and allowed the continuation of Project Super Nova.
