After the whole Keyblade Master test fiasco, Master Eraqus orders Aqua and Terra to eliminate the Unversed that are threatening the Princesses of Heart and to find the suddenly missing Master Xehanort.
Terra starts his search in the Enchanted Dominion where he meets Maleficent and falls in her trap. He gets controlled by Maleficent and, in her control, uses his keyblade to steal Aurora’s heart. Horrified by what he did, he asks Maleficent what she has done to him. She answers that she only awoke the darkness that was already inside of him.
Still horrified by what he did, Terra makes his way to the Dwarf Woodlands. He lands in the chamber of the Evil Queen. He sees her all-knowing mirror and asks if she can ask him where Master Xehanort is. The Evil Queen tells Terra she’ll ask the mirror only if he kills Snow White. Terra decides that he might have more luck by talking with Snow White since he thinks Master Xehanort is looking for Pure Hearts to protect them. While talking to Snow White, Unversed showed up and Snow White fled in the black forest. Terra goes back to the Evil Queen where he eventually gets a cryptic answer from the mirror: “Beyond both light and dark he dwells, where war was waged upon the fells”.
Terra then finds himself in the Castle of Dreams where he sees a crying Cinderella in a torn dress. He witnesses Fairy Godmother transform Cinderella. Seeing that Cinderella has a pure heart, he decides to escort her to the ball where he learns that a boy in a mask seems to be controlling the Unversed. Before leaving, Terra sees Aqua and tells her what he has found out.
Terra decides to visit Master Yen Sid in the Mysterious Tower since he’s the one that had given the news to Master Eraqus about the Unversed. After landing, he sees Micky rushing off into space. Master Yen Sid informs Terra that Xehanort and the Unversed might be connected and that he should seek him out to get answers.
After getting council from Master Yen Sid, Terra hears Master Xehanort’s voice calling him to the Badlands. Master Xehanort tells Terra about Vanitas, but he says he didn’t mean to seperate Ventus’ light and dark side and that he had tried to protect the pure hearts against Vanitas ever since. He asks for Terra’s help.
In Disney Town, Terra races the Unversed to defeat them and Captain Dark to teach him to play by the rules. He himself learns that you don’t have to bend the rules to win.
In the Olympus Coliseum he meets Hercules and is invited to participate in the Games. Hades tricks Terra into thinking competing in the Games will help him control the darkness.
After winning the Games, Terra finds his way in Deep Space where he meets Experiment 626. 626 lunges on Terra and takes his Wayfinder (gift from Aqua). Terra starts panicking and begs 626 to not break it because it was a gift from his friend. His sudden outburst makes Terra realize how much friendship means to him. He then tries to explain what friendship is to 626.
In Neverland, Terra meets Hook and is fooled into thinking Peter Pan wants to steal the light that’s in the chest. After battling with Peter Pan, Terra learns of the trickery. When Hook comes back, with Tinkerbell as his prisoner, Terra asks to see her and sets her free. Before being able to fight Hook, the ticking crocodile appears in the cave and scares Hook away.
While travelling between worlds, Terra feels a warm light and follows it. He finds himself on Destiny Islands. There, he meets a small Riku and tells him about the other worlds. Riku tells Terra he wants to be strong one day to be able to protect what matters to him: his friends. He mentions hearing about a kid that once managed to leave for good and that’s how he knows he can leave the islands. Terra, touched by what the young boy said, bequeath the Keyblade’s power to Riku telling him that this way, he will also become a Keyblade Wielder someday.
In Radient Garden, Terra sees Master Xehanort in the distance and tries to follow him but gets distracted by an old man that dropped his book. He brings back the book to Merlin before chasing after an Unversed. After finally cornering the Unversed, Terra sees Ven and Aqua chasing their own Unversed. The three Unversed combine and Terra, Ven and Aqua need to fight it. After the battle, Aqua admits to following Terra and he takes off, insulted. A man naimed Braig approaches Terra and tells him he captured Xehanort. Terra manages to beat Braig, but only after using the darkness. After Terra leaves, we see Xehanort talking to Braig about how they managed to trick Terra into using the darkness.
Back in the Badlands, Xehanort tells Terra he talked to Ven and says Ven was furious before leaving for the Land of Departure. Xehanort says he’s scared Ven will force the truth out of Master Eraqus. Terra hurries to the Land of Departure; where he arrives just in time to keep Eraqus from striking Ven with his Keyblade. Not listening to Ven, Terra sends Ven inside a portal and then fights Master Eraqus. After weakening Eraqus, Terra regrets what he has done but it’s too late because Xehanort gives the final blow that kills Eraqus. Xehanort then summons Terra to the Keyblade Graveyard.
In the Keyblade Graveyard, Terra admits to Ven and Aqua that Xehanort used him to strike down Eraqus. Ven then explains the X-blade deal and asks them to put an end to him. Before Terra and Aqua can do anything Xehanort and Vanitas make their entrance and separate the three. Terra finds himself battling Xehanort and Vanitas at the same time. He manages to have the upper hand on Vanitas when Xehanort orders Vanitas to go kill Aqua and Ven. Terra can’t stop him so he turns to Xehanort in rage. He battles with Xehanort and is able to knock him down. A vast column of energy appears and Xehanort exclaims “The X-blade has been forged!” He then goes on about how he can’t stay in his old body and see the X-blade in action so he releases his own heart and sends it inside Terra. Being consumed by darkness, Terra’s heart and body aren’t able to fight back Xehanort’s control, but Terra’s mind is able to control his armor and defeat Xehanort. Meanwhile, the X-blade went haywire and released a torrent of energy that devoured everything. The last thing we see is Terra’s armor, still being controlled by his mind, being engulfed in darkness. We then hear Terra say “Aqua, Ven… One day I will set this right”.