The story is set in the fictional town of Isenstadt during World War II, which the Nazis have enforced martial law in order to excavate rare Nachtsonne crystals necessary to access the "Black Sun" dimension. As the game progresses, happenings in Isenstadt become stranger. Locations include the town's sewers, a tavern, a hospital, a farm, an underground mining facility, a church, the SS headquarters, a dig site and caverns, a cannery, a radio station, a paranormal base, a general's home, a castle, an airfield and a large zeppelin.
In an introduction sequence, special agent William "B.J." Blazkowicz steals a medallion from a general on the German battleship Tirpitz. Discovered and captured, he unwittingly unleashes the power of the medallion, which kills all his foes for him. Hijacking a plane from the Tirpitz, he escapes and returns to the OSA headquarters. During a meeting there, he learns that the medallion needs crystals called Nachtsonne, mined only in a city in Germany called Isenstadt, to make use of its full power. The Nazis have begun digging for crystals, led by a general named Viktor Zetta. Blazkowicz is sent to Isenstadt, but his cover is blown by an unknown informant. He then meets up with agents from the Kreisau Circle, a German resistance group dedicated to fighting the Nazis, and with them, makes it to Isenstadt.