Set during World War II, Medal of Honor: Allied Assault chronicles the fictional exploits of Lt. Mike Powell as he battles his way from the shores of Africa to the shores of France to the heart of Nazi Germany.

Lt. Mike Powell, the protagonist, is a skilled U.S. Army Ranger and later an agent of the Office of Strategic Services. Powell and a squad of Rangers are in Arzew, Algeria, fighting on the North African front. The squad fight their way into the city, but an ambush kills all the team except Powell. Powell continues into a North African Axis base, where he rescues S.A.S. agent Major Grillo and retrieves his equipment. The major and Lieutenant Powell split up, with Grillo securing transport, while Powell does sabotage in a motor pool. He then links back up with Grillo, who has commandeered a jeep with a mounted machinegun. The two then drive to a German airfield, where they successfully destroy the Stuka dive bombers grounded there. While Grillo distracts the German forces, Powell sneaks into a bunker, cuts off Axis radio contact and fights his way to a coastal lighthouse to signal the Allied fleet to begin the invasion of Africa. He escapes with Grillo then in the jeep.

Following the Allies' success in Africa, Powell and Grillo are sent to German-occupied Norway to infiltrate the city of Trondheim, where a Kriegsmarine U-Boat is being outfitted with a prototype Naxos radar detector. Grillo makes it into the base first, but is killed by German guards while opening the front gate for Powell. Powell fights his way into the base, then he disguises himself as a German soldier and infiltrates the loading dock. He first goes to the lab where he destroys the Naxos prototype. Next, Powell gains access to a submarine intended to be fitted with the prototype and blows it up, then escapes into the air ducts. He then fights his way out of the base, where he is extracted by an Allied squad.

Thanks to Powell's efforts, the German U-Boat threat is neutralized, clearing the way for the Allied invasion of Europe. Powell is sent to Omaha Beach under Capt. Ramsay, where he and his fellow Rangers storm the bunkers, despite taking heavy casualties, and secure the beach. He is then sent into the countryside beyond the beaches to assist various American units who are being harassed by Nebelwerfers.

Powell is then assigned to go behind enemy lines and acquire intelligence on German troop movements. After rescuing a stranded British pilot Joe Baylor, Powell meets up with French Resistance member Manon Batiste (the protagonist of Medal of Honor: Underground). She sends him out to conduct various acts of sabotage against the German war effort. He then raids a manor house being used as a command post where he secures important enemy documents, including the blueprints for the new King Tiger tank. Powell then escapes the manor house with Manon's aid.