The plot of Mega Man X7 takes place in the 22nd century, during an age when humans coexist with humanoid robots called "Reploids". As some Reploids participate in violent and destructive crime, a police organization called the "Maverick Hunters" has been established to stamp out this activity. Maverick crime is rising in newly constructed cities. As this new crime wave hits, X retires, tired from the never-ending battles. A new group of vigilantes, Red Alert, is introduced. One of their members, Axl, decides he has had enough of their "murdering" and tries to leave the group. Red, the group's leader, is angered by Axl deserting, and goes on a rampage to get Axl back.

Following the Eurasia and Nightmare incidents, Reploids work diligently to rebuild the Earth. Growing weary of the seemingly never-ending Maverick Wars, X decides to retire in search of more peaceful solutions, leaving Zero in charge.[6] In X's absence, Maverick activity rapidly begins to rise, which leads to the formation of an unsanctioned anti-Maverick vigilante group known as Red Alert. As the group grows more and more reckless, one of their members, a new generation Reploid prototype named Axl, decides to defect. Red, the group's leader, is angered by Axl deserting them, and goes on a rampage to get him back.