The novel begins with a group of SPARTAN-IIIs of Beta Company being deployed to a Covenant fleet refueling depot on Pegasi Delta. They proceed to destroy the facility, but due to unexpectedly heavy Covenant resistance, all but two of the three hundred Spartans are wiped out. The only survivors, Tom-B292 and Lucy-B091, are revealed to be only twelve years old, with Lucy being traumatized and rendered mute.

The novel then cuts to a raid by the SPARTAN-II Blue Team on a rebel base at Planet Victoria to recover stolen nuclear warheads. The team is nearly captured by a rebel ambush, but is saved by the timely, intuitive intervention of Kurt-051. Shortly afterward, the novel cuts to a meeting between Colonel James Ackerson of Section Three of the Office of Naval Intelligence, and the top leadership of ONI. In this meeting, they agree that the SPARTAN-II program is prohibitively expensive and that a more streamlined, "disposable" breed of Spartans must be trained for high-risk operations. This becomes the SPARTAN-III program, in which young recruits are gathered from worlds destroyed by the Covenant and co-trained by the SPARTAN-IIs' original trainer, Senior Chief Petty Officer Mendez. To assist in this endeavor, Ackerson forcibly recruits and fakes the death of Kurt-051, and promotes him to Lieutenant, Junior Grade, before placing him in command of the S-III program and granting him the surname of "Ambrose." The operation is based on the secret planet codenamed "Onyx," in the Zeta Doradus system. Onyx also happens to be the site of a major archeological survey being conducted by ONI.

The first S-III company, Alpha Company, proves to be a startling success, but is wiped out when deployed to target a major Covenant shipyard in a mission codenamed Operation PROMETHEUS. Shaken by the images of the battle and massacre of his troops, Kurt proceeds to improve the training regimen for his next batch of recruits, only to watch them fall by the hundreds at Pegasi Delta. He then institutes an illegal medical procedure in the third group of S-IIIs, which will harden their minds and bodies against pain and shock to better allow them to survive.

On October 31, 2552, the top three teams of the S-III Gamma Company, Teams Saber, Katana, and Gladius, conduct a training exercise near a restricted area on the planet, only to find themselves and other UNSC personnel under attack by an unidentified class of alien drone. Very quickly, the few humans on the planet are either wiped out or struggling to survive against this new, unexpected threat. The only humans left are Kurt, Chief Mendez, and Team Saber. Team Gladius is wiped out by the Sentinels and Katana goes missing. At this point, Doctor Catherine Halsey and Kelly-087 arrive to investigate the mysterious planet, but are attacked by more of the unidentified drones and crash land. Once on the planet, they meet up with the human survivors of the attacks, including S-III Team Saber, Kurt, and Chief Mendez. Halsey identifies the drones as Sentinels from the information she reviewed from Cortana's logs on Halo, and proceeds to call for reinforcements, piggybacking her transmission on, ironically, another transmission made by Cortana near the end of Halo 2.

The action switches to Earth, approximately two weeks after the destruction of New Mombasa in Halo 2, where the planet is under siege by Covenant forces. UNSC and Covenant forces battle in space and on the ground, and Fred, Will, and Linda are pulled out of the line of fire by Fleet Admiral Hood, who responds to Halsey's call for reinforcements by dispatching the Spartans to Onyx. Hijacking a Covenant destroyer, the Spartans head for Onyx, only to be caught in the middle of a battle between Brute and Elite ships on the way. Barely escaping, the Spartans arrive at Onyx and are attacked by the Sentinels. They escape using a Covenant Dropship and link up with the other human survivors, and then make their way toward the restricted area of Onyx after shaking Sentinel pursuit.

Meanwhile, at the Delta Halo, the Covenant fleet stationed there is in the midst of the Covenant Civil War. The Covenant are forced to fight each other as well as ensure that the Flood on Delta Halo do not escape. After the battle, separatist Covenant forces intercept Halsey's distress signal and learns of the existence of Onyx. From the planet Joyous Exultation, the surviving separatist forces send a large fleet to the planet in order to plunder its technology and keep it out of the hands of the humans. Unknown to most of the Covenant on the super carrier 'Sublime Transcendence', Admiral Whitcomb's NOVA bomb mentioned in First Strike, sits on the carrier being examined by the Huragok who unknowingly arm it after a Grunt named Kwassass examines the arming device. Shortly after the fleet departs for Onyx, the NOVA explodes, scorching the Covenant planet with over 300 km per hour winds, shattering its nearby moon, Malhiem, into a billion fragments, and disintegrating the Covenant armada, as well as severely devastating the surface of Joyous Exultation.

The large Covenant fleet and a UNSC reinforcement fleet arrive at Onyx, where they encounter one another and the Sentinel defenders of the planet, which attacks anything approaching the system. In the ensuing battle the UNSC manage to reduce the Covenant fleet of over twenty ships to two, but additional Covenant reinforcements, ships that had escaped Whitcomb's planet-destroyer, arrive. The entire UNSC fleet is destroyed save for one prowler-class vessel, the Dusk, which stays hidden and observes events unfolding.

The human forces on Onyx discover an ancient Forerunner city being quickly uncovered by the sentinel drones, and are guided into a massive sphere by Halsey, who determines that the entire planet is a "shield world" constructed by the Forerunner. Fighting off determined Covenant pursuers, they press on into the heart of the planet to find its secrets. To their shock, they find Team Katana in the city, locked away in some sort of suspended animation. Then, they go to a vast Sentinel factory that is churning out literally hundreds of thousands of drones (one every six seconds). Disabling the factory, they press on to the planet's core, where they discover a Slipspace rift that shunts those that pass through it to a miniaturized Dyson Sphere that is separated from normal space-time by advanced Forerunner Slipspace technology. Will and Spartan-IIIs Dante and Holly fall fighting off the Covenant, and Kurt remains behind to ensure that the Covenant do not plunder Onyx's secrets by detonating two FENRIS nuclear warheads, giving his life to prevent them from reopening the rift.

Hiding at a distance from Onyx, the surviving UNSC prowler watches on as the planet's surface rips apart, to reveal that the entire world is constructed of literally trillions of Sentinels, all connected together to provide an impenetrable defense around the Dyson Sphere at the heart of the planet. They annihilate the Covenant fleet orbiting the planet and the Dusk is forced to retreat. Within this sphere, which features terrain similar to that of Earth, the surviving humans discover that the planet is literally a massive bomb shelter for the Forerunner to have survived the activation of the Halos, but find themselves alone in the vast habitat; for some reason, the Forerunner never entered this structure when the Halos were first activated. After a funeral ceremony for Kurt, Will, Dante, and Holly; Fred, who was given a field commission of Lieutenant by Kurt, takes command and orders everyone to move out and search for a way to free team Katana and escape the sphere. Fred and Kelly then officially welcome the surviving Spartan-IIIs to the Blue Team.