Victory Gundam is set in UC 0153, and succeeds the Federation and Crossbone Vanguard conflict of Mobile Suit Gundam F91. The Earth, still loosely controlled by the greatly weakened Earth Federation, comes under attack by BESPA, the armed forces of the space colony-based Zanscare Empire. Only a ragtag resistance movement, League Militaire, stands in BESPA's way as they swiftly conquer much of space and start their invasion of Earth, with the advanced mass-produced mobile suit, the Victory Gundam, as the League Militaire's secret weapon. However, BESPA's power continues to grow, using violent means, including public executions with guillotines, to strike fear into those living on Earth.

Living peacefully on Earth in the remote Eastern European town of Kasarelia, 13-year-old Uso Ewin and his childhood friend Shakti Kareen are soon thrown into the conflict when they encounter ace BESPA pilot Chronicle Asher. Soon, Uso finds himself joining forces with Marbet Fingerhut and the rest of the League Militaire, piloting the Victory Gundam against the BESPA, and soon discovering the horrors of war.