The Admin teleports Jesse, Jack/Petra, Radar, and Jack's villager friend Nurm to the Sunshine Institute, a prison full of people the Admin has sent down. Jesse and Jack/Petra try to make a run for it but a Prison Golem reprimands them and knocks them out. Jesse wakes up in the Warden's office. There, Jesse has the option to work for the Warden and save Radar who is on the verge of suffocating to death or resist. After learning more, the group discovers a dangerous prisoner known as Prisoner X. The Admin comes to the prison before Jesse would have a chance to go down, demotes the Warden to a prisoner, and makes Petra/Jack fight Jesse. They both attempt to slash the Admin but he stops them and revokes Petra/Jack of the gauntlet before abandoning the institute and assuming Jesse's identity. Then, Jesse makes it down to Prisoner X and after discussing, she reveals her name is Xara and the Admin's name is Romeo. Xara agrees to help Jesse and the rest of the group, but her prison is rigged with TNT and pressure plates, if there is no one standing on them, the room will explode. Jesse then must leave either Nurm or Lluna behind to escape. After making it out and arming themselves, the Warden revealed Xara was a former Admin and Romeo took away her powers, before Xara kills him and helps lead the group to the Underneath, below the bedrock.

Jesse learns from Xara that she and Romeo were not the only Admins; there was a third one named Fred who had created a weapon that could strip Romeo of his powers. Romeo found out and killed Fred, but not before the latter hid the weapon somewhere. Xara agrees to help fix the portal in her old town the Oasis while Jesse, Petra, and Radar go to Fred's Keep, where they meet the people living there and find a clue that hints the weapon could be located in Romeoburg. Before arriving, they are met by Ivor, who agrees to help Jesse before leaving. After completing a trial in Romeoburg, they find a journal that contains a password: "#POTATO451". Back at the Oasis, Jesse is given the option to give Xara her bed back, to which if they do, she stays behind to help hold off the monsters invading. Regardless, Jesse is forced to choose between letting Radar apparently sacrifice himself to distract a giant Enderman or leaving Fred's people for dead.

After returning home, Jesse, Petra, and Jack come up with a plan to battle Romeo. If Jesse gave Xara her bed, Romeo destroys the neighboring Champion City, but if Jesse did not give Xara her bed, she attempts to attack Romeo only to get strangled to death. It is revealed that Ivor managed to free Nurm or Lluna from the prison. With Lukas's assistance, they arrive at the "Terminal Space", the home of the Admin. Jesse, Jack, and Petra reaches the Terminal Space, with Jesse collecting Fred's gauntlet after inputting the password and battling Romeo. Jesse successfully uses the gauntlet to strip Romeo of his power. Jesse then has a choice to either take Romeo back for redemption or leave him to his fate, and if they had chosen to rescue Fred's people, then Radar arrives to save them; if not, Romeo distracts the monsters of Terminal Space for Jesse and their friends to escape. Jesse's final choice involves them either choosing to leave Beacontown and go on adventures with Petra, or staying as mayor.