The game's plot takes place in 1886, 500 years after Sir Daniel Fortesque's battle against the evil sorcerer Zarok in the previous game. In Kensington, a wealthy industrialist and sorcerer named Lord Palethorn discovers Zarok's spellbook and casts its spell of raising the dead over the city of London. However, the pages of the book soon scatter across London, and Palethorn gains a demon-like appearance as a result. The spell Palethorn casts once again resurrects Dan, whose body had been on display in a nearby museum. He is recruited by a professor named Hamilton Kift and his ghostly sidekick Winston Chapelmount (a play on Winston Churchill) to recover the pages of Zarok's spellbook and put a stop to Palethorn's plans. Along the way, they end up being joined by an ancient mummy princess named Kiya, whom Dan falls in love with.