When the game starts, Kratos has been serving the gods for ten years. He kills the Hydra on behalf of Poseidon, but he has grown tired of his service and suffering. He summons Athena, who states that if Kratos performs one final act—the murder of Ares—he will be forgiven for killing his family. Ares is waging war on the city of Athens out of hatred and jealousy of his sister Athena, who assigns Kratos to destroy Ares because Zeus has forbidden divine intervention. Athena guides Kratos to the war-torn Athens. After a strange encounter with a gravedigger who encourages him to continue his task, Kratos battles his way to Athens's oracle, finds her, and learns that the only way to defeat Ares is with Pandora's Box, a mythical artifact that grants the power to kill a god.

Kratos enters the Desert of Lost Souls, and Athena tells him Pandora's Box is hidden in a temple chained to the back of the Titan Cronos—a punishment by Zeus for Cronos' role in the Great War. Kratos summons Cronos, climbs for three days before reaching the Temple entrance, overcomes an array of deadly traps and an army of monsters, and eventually finds the Box. But Ares, aware of his former servant's success, kills Kratos as he is leaving the Temple. While harpies take the Box to Ares, Kratos falls into the Underworld. He battles his way through the fiery realm, and with help from the mysterious gravedigger, who tells him Athena is not the only god watching over him, he escapes and returns to Athens.

Kratos recovers Pandora's Box from Ares, opens it, and uses its power to become godlike. Despite Ares' best efforts to destroy Kratos physically and mentally, including stripping him of the Blades of Chaos and all magic Ares makes a desperate attempt to drive Kratos mad by making him relive the death of his family. Opening a portal, Ares traps Kratos in an illusion. Ares recreates the temple where Kratos slew his wife and child, along with images of Kratos's Family. Ares then creates copies of Kratos which attack his wife and child. After this fails, Ares strips the Blades of Chaos from Kratos' arms, taking back the weapons he had given him, and impales Kratos' family with them with Kratos watching in horror. Freed from his own mind but without weaponry, Kratos is at the mercy of Ares until he spots a very large metal sword, which was formerly used as an ornamental bridge inside Athens. With it, he engages, defeats and kills his former master, the God of War. Athens is saved, and although Athena tells Kratos his sins are forgiven, the gods cannot erase his nightmares. Forsaken by the gods, he tries to commit suicide by casting himself into the Aegean Sea, but Athena intervenes and transports him to Mount Olympus. As a reward for his services to the gods, she provides Kratos with a new set of blades and the seat as the new God of War.