To escape an increasingly overcrowded Earth, world leaders gathered together and pooled their resources to construct cylindrical colonies, called Sides, that could indefinitely sustain millions of space-dwelling humans. When humans took to the stars to start new lives, the designation Universal Century marked the passing of years - the year U.C. 01 saw humankind embarking on a bold emigration to space. As the decades passed, Earth succeeded in transplanting most of the population to space.

Years after the first colonies became populated, the spaceborn people of the Federation, called spacenoids, began to yearn for independence from the Earth homeworld. One of the most powerful collection of colonies, Side 3, began a nationalistic movement for independence. Under the charismatic leader Zeon Zum Daikun, the people of Side 3 declared their independence from Earth and formally changed their name to the Republic of Zeon. Tension between the Earth Federation and Zeon increased over the years. In the year U.C. 68, Daikun died under mysterious circumstances. His trusted advisor, Degin Sodo Zabi, assumed the mantle of leadership, creating a new government for Side 3 called the Duchy of Zeon.

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Under Zabi's strong rule, the Zeon nation became more militaristic, churning out powerful weapons of war for a preemptive strike against the Federation. On the third of January, in U.C. 79, Zeon began a vicious first strike against the people of the Federation. Using brutal nuclear weapons of mass destruction, Zeon gained the upper hand in what would become known as the "One Year War." Attempting to knock the Federation's military off swiftly, Zeon attached engines to a depopulated colony and tried to drop it on the Federation's main base, Jaburo. This tactic, called "Operation British", only succeeded in raising the horrible death toll of the war. Because of the terrible attrition, over half of the human race had been killed in the early days of the war. Soon after, both sides agreed to the Antarctica Treaty, banning gas weapons, nuclear weapons, and colony drops. To complement their formidable fleets, Zeon utilized converted Mobile Suits, the tremendous mechanized suits that had been used to construct the space colonies. The discovery of subatomic Minovsky Particles paved the way for compact thermonuclear reactors, a power supply great enough for the Mobile Suits to operate. The Minovsky Particles that were emitted by these Mobile Suit reactors had an intriguing side effect - they jammed all conventional radar, essentially rendering them invisible to most ships. Thus these Mobile Suits ushered in a new form of close space combat, and were devastatingly effect in the hands of Zeon in the early stages of the war.

When the smoke had cleared and the battle lines settled, both Zeon and the Federation found that their resources and forces had been depleted. The two sides began gearing up for another long series of battles. By this time, Zeon had become entrenched on several continents of the Earth: Asia, Europe, and North America. The Federation still maintained a strong fleet and its well fortified Jaburo base in South America.

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To even the scales of the war, the Federation planned to create Mobile Suits of their own. On a secret testing base on Side 7, several prototype Mobile Suits were being thoroughly tested for combat: Guncannon, Guntank, and Gundam.

Gundam 0079: The War For Earth begins in late September, in the year U.C. 0079, just as Zeon and the Federation are preparing for another major war. Zeon intelligence has learned that the Federation has created a new prototype series of Mobile Suits and that they are hidden on a secret military base within a Side 7 colony. A small team of Zeon Mobile Suits, called Zaks, are attempting to destroy the prototype Federation Mobile Suits before they can be used against the Duchy of Zeon. Led by the infamous Shar Aznabull, the Zaks have already attacked Side 7 and have found the military base where the Gundam Mobile Suit is located. The player, caught in the middle of this surprise attack, coincidentally drives off the road and speeds into the military base. The game begins with the civilian player discovering Gundam, just as a Zak tears into the hanger.