Beck and Tron ride their light cycles through the Outlands; it is Beck’s first training session, and he is doing well until Tron makes a jump across a chasm, expecting Beck to follow him. Beck falls short, barely making it to the opposite ledge and losing his baton as he struggles not to fall. Tron tells him that the problem is that he hesitated, and Beck reiterates his doubts about being the next Tron when he can't even match the real one. Beck leaves for Argon but is sighted by a Recognizer; pursued for violating the city's curfew, Beck makes his way to a checkpoint and is forced to hide in a giant crate, closing the door before realizing that there were other programs inside. One, Cutler, tells him that he has made himself a prisoner. The crate is lifted by a Recognizer and Beck realizes that they were heading for the Games.
At the Coliseum, Beck and the other programs are met by Sirens, who provide them with protective gear for the Games. One of the other captives, Rilo, believes that they will all die and blames the Renegade for the existence of the curfew. Beck tells him to calm down and to stick close. The group is pitted against Black Guards in a game of Disc Wars, with the difficulty level set to extreme. General Tesler, Pavel, and Paige are revealed to be in attendance, and Tesler gives the signal for the Games to begin.
Rilo gains confidence after seeing Beck fend off a Black Guard, and joins in the fight, managing to derez one of their opponents out of luck. However, he fails to notice another leaping at him from behind, and is derezzed. Beck, distracted by Rilo’s death, is pushed out of the way of another incoming enemy by Cutler. Together, the two are able to defeat all the Black Guards. In their holding cells, Beck expresses guilt and doubt, still haunted by Rilo's death. Cutler says that he'd felt the same way when the ISO war was lost, revealing himself to be a veteran, and adds that his remaining friends who'd survived had begun to disband until they heard about the Renegade. Cutler had come to Argon City to join the Renegade, believing him to be Tron.
While being transported to the light cycle arena for the next Game, Beck causes a distraction among the other programs and attempts to escape with Cutler, but they were discovered by Paige. Handcuffed to each other and without batons, the two are thrown into the light cycle arena to face three Black Guards on bikes. Despite their disadvantage, they are able to use the light ribbon from a guard's bike to cut the line holding them together, and rally to defeat all three guards. The crowd applauds them, much to the displeasure of Tessler, who feels that Beck and Cutler should be derezzed as conspirators; but Pavel suggests an alternative way of showing the audience that rebellion will not be tolerated.
Pavel escorts Beck and Cutler back to the disc arena and informs them that the winner of the next game will be set free. Beck asks who they will be fighting, and both he and Cutler are shocked when Pavel announces that they will be fighting each other to the death.
In the subplot, Able asked Zed and Mara whether Beck had shown up for work. He was going to let Beck put up one of his favorite bikes, the ENCOM 786. Mara is excited, exclaiming that the bike is one-of-a-kind, built for speed and favored by Kevin Flynn himself; but Zed, preferring newer models, is not impressed. Able told Zed and Mara to let Beck know that the light cycle would be in his office, and hoped that Beck wasn't getting into trouble.
Zed and Mara later go to the 0001001 Club, where Zed, embarrassed to dance with Mara due to his interest in her, sits alone and sulks while she dances with their other coworkers. An attractive program, Perl, approaches to talk with him. When Mara returns from the floor and invites Zed to dance with her, he is irked that she refers to him as a friend and leaves with Perl. The two talk for a while, but options for fun in the city have been limited since the occupation, and Zed, hoping to impress Perl, takes her to the garage. Perl talks him into showing her around Able’s office, but she appears uninterested in Able's collection of relics (including a Bit) and hints at leaving. In a final effort to get her to stay, Zed shows her the ENCOM 786. Though she appears intrigued, she asks Zed to have a look at her own light cycle, claiming that it has been acting up. Zed rezzes the bike, but can’t find anything wrong with it. As he turns to tell Perl, she hits him on the head with the vintage baton and rides off in it. Finally realizing his mistake, Zed calls himself an idiot, a sentiment to which the hovering Bit agrees.
Beck and Cutler are thrown into the game arena and instructed to fight each other to the death, with the winner going free. Neither wished to kill the other, and Cutler forfeits the match, denying General Tesler the spectacle he'd expected. Paige convinces the disgruntled general to keep his word instead of immediately derezzing both programs, and Tesler announces that Beck will go free while Cutler would be publicly derezzed at Argon Square. The two programs are taken outside and Beck was released; Cutler, under heavy guard, throws him the veteran armband he'd shown him in the cells, and tells him to find Tron, join him, and never stop fighting.
Beck returns to Tron’s hideout and reports on his failure to save Cutler, but Tron points out that Cutler won't be executed until the next cycle, leaving time to mount a rescue. Beck agrees and heads off into Argon City.
Once in the city, Beck boards the recognizer holding Cutler and hijacks it. Pavel notices the course deviation and orders that the recognizer be shot down. Damaged from the resulting attack, the recognizer crashes into a building, coming to a rest at the edge of its roof. Beck and Cutler rescue the guards inside just before the remains of the recognizer topple from the building.
Escaping together, Beck and Cutler are intercepted by Paige on a roof bordered by light jet turbines. Cutler throws his identity disc, but hits the controls of a turbine instead of Paige, surprising her when what she thinks is a missed attack activates the turbines and blows her away from her prey; Cutler had not been programmed for fighting but for aerodynamics.
Back at the garage, Zed is afraid to face Able with the news that Perl had tricked him and stolen the ENCOM 786. Able comes out into the garage to look for the vintage bike's baton, but Mara, having figured out what had happened, intercepts Zed before he can get in trouble and offers to help him track the missing bike.
The two trace Perl to the docks, where she has presented the baton to Gage, the leader of her gang. Perl jeers at Zed, scoffing at his gullibility, but Mara, furious at the insult to her best friend, punches Perl in the jaw, allowing Zed to grab the baton. He rezzes the vintage light cycle and, with Mara riding behind him, flees the scene as Perl and the gang pursue them on their own light cycles.
Meanwhile, Beck and Cutler had also fled to the docks, deciding to use a light boat to get out of the city, but Paige catches up and engages them in battle. The three fight until exhausted, and Paige, refusing to give up, holds them at bay until Perl and her gang accidentally collide with her, allowing Beck and Cutler (as well as Mara and Zed) to escape in the chaos. Angered by the intrusion, Paige arrests Perl and takes the gang in.
Beck and Cutler board a light boat but are pursued by Tesler's larger speed boat. Pavel arrives in another light boat, which slams into them as they are hit by cannon fire, causing the two boats to fuse together. Beck fends off Pavel and knocks him into the water, but Tesler is closing in and they are unable to break the connection between the fugitives' light boat and the one slowing it down.
Suddenly, an underwater speedboat rockets out of the water and uses its light ribbon to separate the fused boats. The new speed boat shoots away under the surface; though the fugitives could not know it, its pilot is Tron.
Arriving at a different dock, with pursuit left far behind, Beck returns Cutler's armband without revealing his identity. Cutler pledges his support for the coming revolution, and the pair exchange goodbye's and part company.
Back at Tron's hideout, Tron asks Beck if he has returned to continue the fight or to quit. Beck acknowledges that there will be setbacks, but it would be okay as long as they keep fighting. He then asks what will happen next. Tron informs him that they will continue training: “Like I said, you’ve got a lot to learn."