A transport ship is en route to Earth, transferring Federal Forces soldiers from the space colonies to Earth. Among the ship's passengers are young officer Shiro Amada, and fresh-faced recruit Michel Ninorich. Their attention drawn by a nearby signal flare, the passengers spot a Federation mobile suit engaged in a running battle with a Zeon prototype. The foolhardy Shiro enters the fray in a Ball, a crude space pod intended for manual labor, enabling the Federation pilot to escape. Shiro's Ball and the Zeon prototype are both destroyed in the skirmish, and both combatants are forced to seek refuge inside a wrecked battleship. Putting aside their differences, Shiro and the Zeon test pilot, a young woman named Aina Sahalin, team up to create a distress signal and are each rescued by friendly forces.

Shiro, Michel, Sanders, Karen and Eledore ride in a jeep to the base. As they arrive they watch the Gundams of the 06th Team moving out for combat. Shiro reports in to the base commander, Kojima. Kojima tells Shiro and the rest of the team that the Zeon have built a factory somewhere in the area.

An informant tells Kiki that he saw a light flying through the desert a few days ago. Shiro and the rest of the 08th Team move out to see if they can find the testing range and the Apsalus. Michel is distracted from his duties because he keeps reading B.B.'s letters.

In Europe, Zeon forces retreat when the Federation successfully completes Operation Odessa and drives M'Quve out of his mines. Yuri and his soldiers are left behind, but he promises to take them to Ginias's base and get them back to space. He doesn't care if the Federation has the Earth because the war will be fought in space.

Shiro is court-martialed under suspicion of being a spy. He says that there are good people on both sides of the war, and he hopes for the time that the war will end. The panel laughs at him, and Captain Isan Ryer asks him if he could shoot the enemy.

On a Big Tray land battleship, several Federation officers watch a battle simulation of the Apsalus attacking a Federal Forces fleet in space and entering Earth's atmosphere unhindered. The Apsalus heads for South America and destroys the headquarters at Jaburo. Kojima and Ryer want to find out more about Apsalus, and Ryer has a plan that involves using the 08th Team.

The Federal Forces begin a massive assault on the Zeon mountain base. Jet Core Boosters drop so many bombs on the mountain that the shape of it changes. Norris uses his Gouf Custom to expertly destroy several Jet Core Boosters.

Before the Apsalus III launches, Ginias looks at it with the eyes of a madman. Aina asks him what happened to the scientists, and he says they are all drunk somewhere. After the Apsalus III launches, Shiro announces that he is leaving the service.

On Christmas Eve UC 0079, a Musai battleship is attacked by the Federal Forces. A Zeon soldier loads several kids onto a Komusai shuttle and tells them they have an important mission to fulfill. After the Komusai is launched, the Musai and Gelgoogs are destroyed.