Sora, Donald, and Goofy expect to land at Olympus Coliseum, but instead they find themselves in the Underworld, the domain of Hades, where they see a woman being attacked by Heartless. When they go to help her, the Heartless run away, and she introduces herself as Megara, a friend of Hercules. She tells them that Hades has been sending nonstop waves of monsters for Hercules to fight in the coliseum, so she wanted to try and talk Hades into easing up on him. Sora offers to go in her stead. As they make their way through the caves of the Underworld, they encounter Number IX of Organization XIII, but he runs away in fear without even trying to fight. They also find a strange glowing ball of energy with a picture of a book on it, but they decide to leave it be for now.
Meanwhile, Pete is meeting with Hades on behalf of Maleficent in the hopes of restoring the alliance they had previously. At Pete's suggestion, the god of the Underworld decides to dredge up a dead warrior to deal with Herc for him. Hades throws a ball of fire into the swirling vortex of souls and brings out a warrior named Auron. Hades offers to bring him back to life if he kills Herc, but Auron refuses to cooperate with him. Hades attacks Auron in a rage just as Sora and the gang reach his chamber. They try to help Auron fight Hades, but they can't even lay a finger on him, and a strange feeling begins to overtake them. Hades explains that the Underworld has a curse that drains their power. At the urging of Auron, the gang flees from Hades, but he pursues them through the cavern.
After escaping from Hades, Auron introduces himself to the trio, and they continue on their way. While they do, Hades sics Cerberus on them. When the gang reaches the end of the Underworld, they find the door has been shut. Sora unlocks it with the Keyblade, but this gives Cerberus enough time to catch up to them. Auron tries to hold it off so the others can escape, but Sora decides to stay back and help him. The two of them manage to weaken Cerberus long enough to escape and shut the door.
After the battle with Cerberus, Auron vanishes. Meanwhile, Herc is going to fight in the coliseum again, but Meg can tell he's getting worn out. Hades, who was observing the group's escape, noticed that Sora was able to unlock the door with ease. Pete explains that the Keyblade can unlock anything, which gives Hades a new idea. He tells Pete that there's a much more fearsome and dangerous coliseum in the Underworld, called the Underdrome, but it was locked by his brother Zeus. When Pete tells Hades that the Keyblade can't simply be taken like a normal weapon, Hades decides to use Meg to accomplish his plan. As he plots, Meg begins to feel a chill up in the coliseum.
The trio leaves the Underworld and heads up to Olympus Coliseum itself, where a weakened Hercules is happy to see them. He tells them that there is a special stone called the Olympus Stone that the gods use to negate the Underworld's curse. While he goes to get it, the trio reunites with Phil. He says they still haven't managed to become full-fledged heroes, and he does some training with him. After the training, Phil leaves to go do something, and Herc reports that the Olympus Stone has been taken by a man in a black cloak.
Hades shows up and tells Herc that he kidnapped Meg and took her to the Underworld. Herc prepares to leave, Hades tells him that he is going to have another match against the Hydra. If he doesn't stay and fight, the Hydra could destroy the coliseum, so Sora offers to go in his stead. Back in the Underworld, they see Phil, who says that he went there to find a backup hero, but he failed. Meanwhile, Herc fights and seemingly kills the Hydra, so he rushes to help Sora and friends find Meg.
Deeper in the Underworld, the trio confronts the Organization member, whose name is revealed as Demyx. He refers to Sora as "Roxas," much to his confusion. Demyx reads the orders he got from the higher-ups of the Organization, which tell him to eliminate Sora if he fails to respond to the name Roxas. He reluctantly complies with the order, pulling out the Olympus Stone and using it to negate the Underworld's curse. Sora and friends defeat Demyx, who drops the Olympus Stone. Before leaving, he tells them about Absent Silhouettes, which is what the glowing orb they saw earlier was. These Absent Silhouettes will allow them to fight phantoms of the fallen Organization members. After hearing this, they return to the book and fight the Absent Silhouette of Zexion. They defeat it and return to where they encountered Demyx.
Sora and the gang find Meg, who has been turned to stone next to a lock. Sora uses the Keyblade to open it, and they then encounter Hades, who now has Meg tied up. He taunts Sora about helping him open the Underdrome before vanishing. Pete appears and fights them alongside some Heartless, but there are too many Heartless for them to deal with. Sora releases Meg's bindings, and Hercules shows up and knocks Pete down. He summons Pegasus, who helps Meg escape while he stays behind to fend off Pete. After Sora and friends leave the cave, however, Meg asks them to help Herc, who has reached his limit. They go back and help him beat back Pete, who decides to flee.
Back at the entrance of the Underworld, Hades informs Herc that he didn't finish off the Hydra, and that it is now wreaking havoc up there. He leaves to prepare the now-unlocked Underdrome as the group goes back up. In Olympus Coliseum, they find that the Hydra has destroyed much of it already. Herc is filled with guilt, blaming himself for failing to make sure it died. Phil, Meg, and Pegasus help out Sora, Donald, and Goofy to give Herc a well-earned break. Together, the six of them manage to destroy the Hydra, but it doesn't help Herc feel better. Sora goes to give the Olympus Stone back, but before he does, it glows and helps him open up the gate to the next world. With Meg's assurance that she'll take care of Hercules, the three junior heroes proceed onwards, while Hades plots to open the Underdrome...
- Arc Hero: Hercules, although Auron is the Guest-Star Party Member of this world. Granted, the latter is only in for the first third of the episode.
- Arc Villain: Hades is this in general, but the episode ends with the fight against the Bloodthirsty Hydra. Also, Cerberus is the last boss you fight while Auron is in your party.
- Broken Record: Demyx keeps calling Sora "Roxas" to the point that Sora calls him a "broken record".
- The Cameo: The opening cutscene has Hercules blast away the Rock Titan. The latter doesn't even get an entry in Jiminy's Journal.
- Continue Your Mission, Dammit!: During the fight with the Hydra, Phil will repeatedly yell at Sora to "GET UP ON THE HYDRA'S BACK!" with no breaks in-between.
- Damsel in Distress: Megara, big time. She's in distress when you first encounter her, and then Hades easily captures her later on after Sora reunites with Hercules. She doesn't even bother to use self-defense when Pete is fought near the end.
- Deal with the Devil: Defied. Hades offers to revive Auron in exchange for defeating Hercules. Auron refuses, citing that Hades is not part of his story, and joins forces with SDG.
- Downer Ending: In spite of the Hydra's defeat, the Coliseum is destroyed, with the implied deaths of dozens of people. This causes Hercules, already worn out from fatigue, to have a mental breakdown. Also, Hades' ploy to use Sora to unlock the Underdrome succeeds.
- Establishing Character Moment: Demyx showcases himself as a Cowardly Lion when he bails on his mission. A confused Sora could only mutter "Okay...?".
- Foreshadowing:
- Darkness is shown coming out of Sora and his friends, showing that Hades has cursed them. Said darkness shows up again once they realize their weakened state.
- Right after Auron leaves the party, reading the journal entry makes a mention of Hades wanting to use Sora to reopen the Underdrome, even though he made no mention of it yet. The very next cutscene is about this topic.
- Demyx is a genuine coward, despite being a Nobody, and therefore should be lacking emotions. An early foreshadow to the reveal that Nobodies can regain their hearts in Dream Drop Distance.
- Horrible Judge of Character: Hades called Auron the "mother of all bad guys". Thing is, Auron wasn't a villain in Final Fantasy X, and was killed by a Goddess Of Evil when he attacked her out of grief for the deaths of his two best friends. Naturally, he defects to Sora at first chance.
- Late-Arrival Spoiler: For Final Fantasy X. Auron was not revealed to be Dead All Along until after Yunalesca's defeat, near the endgame.
- Required Party Member: During the brief time Auron is in your party, he's mandatory and cannot be swapped out.
- Rhetorical Question Blunder: Pete sarcastically tells Hades "Why don't you pick somebody already dead, and save him the trouble". This gives Hades the idea to send Auron after Hercules.
- Running Gag: Phil's Two Words: I Can't Count returns in this game, with his "eat, bathe, sleep" comment. Again, Goofy does the counting.
- Screw This, I'm Outta Here: Demyx ends up bailing his mission because he doesn't want to deal with Hades. In the manga adaptation, Xigbar even calls him out for cowardice.
- A Twinkle in the Sky: Applies to the Rock Titan after Hercules throws him into space, probably as a homage to Team Rocket.
