On her way to school, Nanami Knight Bladefield encounters a boy who saves a group of people from a trailer collision. After observing that guy Souta Hatate in class where he rudely responds to classmates, she confronts him about his habit of looking at the tops of people's heads, and learns he has the ability of seeing someone's future in the form of flags and the ability to "break" the flag by his actions. They meet Akane Mahougasawa who bears a flag of friendship that persists even after he breaks it several times. Souta takes the girls to his residence, the Quest Dorm, which is in poor shape. Souta scrambles to save Akane when she shows a death flag.

Souta recalls his meeting with Sakura aboard the Premium Ambriel. He meets childhood friend Okiku who has a big sister flag. They have the Quest Dorm renovated, thanks to student council president Mimori Seiteikouji's volunteers. Souta meets effeminate boy Megumu, who along with Akane, Okiku, and Nanami, move in to keep the dorm open. He later discovers a letter and recalls the encounter with Sakura that led to his attaining his powers and his mission of gathering a party of characters.

Souta wakes up in his room, only to find out Akane and Megumu is in his room, led by Okiku. Ruri is delivered to the Quest Dorm. The Quest Dorm is forced to enter Hatagaya Academy's Sport Festival and win the MVP in order to prevent the dorm from being demolished, as well as prevent Souta from being expelled. Rin is sent to help Quest Dorm in winning the MVP title, so she starts an extreme training routine. Despite the "hate guy" flag she possess, Rin once had a male friend named "Souda", whom she still exchange mails. It is revealed that "Souda" is actually Souta, and they were childhood friends.

During the first day, Quest Dorm members are excelling the Sports Festival. But their performance dropped, and their ranking dropped to the 8th place during the second-to-last day. During night before the last day of the Sports Festival, Souta talked with Ruri about his condition. While reciting the letter he received, he activated Ruri's "First Flag, Program Code". Souta is given a vision about Quest Dorm, where there exist an underground passage below the dormitory. During the last day of the Sports Festival, under the guidance of the Victory Flag, the Quest Dorm received MVP title despite ranked 2nd.

Souta tried checking the door to the underground passage, but are unable to find the door. Everyone complained that Souta agreed to go on a date with Akane, so Souta goes on a date with everyone but Nanami, who chooses to stay at Quest Dorm and Ruri, who stayed behind. Souta and Ruri examine the underground passage, where they found a stone chest that wrote the same content as Souta's letter. The Samurai, Mei appears.

Mei transfers to Hatagaya Academy as Souta's classmate. Souta and the Quest Dorm members go on a trip to the beach and forest. Souta is revealed to have a fear of the ocean due to his traumatic experience after surviving the Premium Ambriel incident. Souta meet Kurumiko, the Cleric, which exhibit the "Story Flag", which show story progression. Kurumiko's parent is revealed to be the victims of Premium Ambriel. While Kurumiko shows Souta her secret place inside a cave, they were trapped by the high tide. Souta saved both of them by breaking Kurumiko's death flag by making Kurumiko his little sister, just like how he make Okiku his older sister. After being saved, they met a mysterious girl in white.

The mysterious girl revealed to be Megumu, which is forced to crossdress by his older sisters that hangs out in the nearby mansion. In order to bring Kurumiko back to Hatagaya Academy, Souta asked for Mimori's help, which in return he needs to go on a date with her. Despite Mimori's best efforts, only Mei are capable of bringing Kurumiko to Quest Dorm, which makes Kurumiko being attached to her as a result. It is also revealed that Mimori and Tsumugi are also becoming members of Quest Dorm, and, by Kurumiko's persuasion, Mei took the same action to live in Quest Dorm. Souta talked with Mei about his abilities. Mei brought him to a parallel world, where Souta did not exist, thus triggering the deaths of Nanami, Akane and Kurumiko. Mei brought him to Premium Ambriel, where he meet Miyuki, now Miyuki Hatate, who replaces Souta's role as the protagonist. Souta's Death Flag triggered, and Mei tries to save him by breaking the Death Flag, and while doing so, she learns about Souta's true destiny. Despite being unable to do so, Souta is saved, but Sacrament comes and wipe all of Mei's memory about flags.

During summer break, while spending his holidays with Okiku and Rin, Souta is kidnapped by Riru and brought to Akane's house, to fulfill Akane's wish to meet him. As a result, Okiku, Rin, Megumu, Mei and Kurumiko went to Akane's house. Nanami, knowing the Quest Dorm members are at Akane's house, are frustrated because she wasn't invited as well. Thus, the Quest Dorm members (plus Ruri) decided to meet Nanami at her country in Principality of Bladefield. On their way to the capital, Twinblade, Souta met Hakua, the 14th Princess of Bladefield, Nanami's half-sister. Later they are being chased by Ruri's clone, which is programmed to assassinate Hakua and Nanami. Souta felt his power increases again and used his own power to save both of them from the assassination, though that makes them separated from the main group.

The Quest Dorm members, alongside Souta, Nanami and Hakua safely arrived at Bladefield. But their happiness was not for long, that Nanami and Hakua's father are said to be deceased recently. The first prince, Elia, then uncover the truth; he is the real father of Nanami and Hakua. A condolence ceremony is then done to mourn the deceased king, and celebrate Elia's coronation as the new king at the same time. Souta then met No. 0, the leader of the Council of Seven Virtues. She then explains about Bladefield's fairy tale, about a nameless person who has been changed into the flag, two princesses and ten heroes. Souta realized his destiny that awaits him at the end of the path. No. 0 asks Souta to help her to save the world with his power.

Hakua transferred to Hatagaya Academy. Hatagaya Academy organizes the School Festival. Souta is tricked into recommending all the Quest Dorm members (besides him, Kurumiko, who is not learning at Hatagaya and Tsumugi, who is too old) a total of 9 people, to enter the Miss Hatagaya Academy Beauty Contest. During the beauty contest, Nanami, who realized that Souta is down, tries to cheer him up with a few speeches, which makes her the winner of the contest. As the winner, Nanami received "Souta Escort Free Pass", which makes her able to get anything in the festival for free as long as she is accompanied by Souta. At the stairs near the shoe lockers, both of them met a mysterious girl in glasses, who is seem to be running from something.

The mysterious girl is shown to be Serika Gin'yūin, also known as Sericchan, the idol loved by Japan. She is supposed to held a concert during the final day of the festival. Souta and Nanami learnt that Sericchan managed to become an idol because Souta saved her, by saying she has a "Success Flag", though she doesn't know the identity of that person, and she named him as "Purple Flagman". Souta realized that Sericchan is the Bard. During the concert, Souta's power increases once more, and the time freezes up. No. 0 appears and tells Souta that he should not be in the world, or the world will be destroyed. So, despite Souta had promised the Quest Dorm members to dance with them, he breaks the promises and uses his power to make everyone forgets about him. Nanami, unaffected by Souta's power, is the only person who is able to remember Souta.

In the servers, Souta desperately fights the Angelus Gemini in order to protect his world and his friends by placing "Death Flag" upon his enemies. Meanwhile, Nanami found out everyone has forgotten about Souta, and his existence is overwritten. During their graduation day, all Quest Dorm members are going for separate ways. The Quest Dorm is said to be demolished soon. Nanami breaks into Souta's room, and find the letter that Souta received, written by her handwriting, thus breaking Souta's Protect Mode. Riru, who always remembered everything, finally tells Nanami the truth; Nanami is Souta's missing sister. Separated into two, half of Nanami is locked in the jail in Principality of Bladefield, in which she manages to escape and hides inside Ruri. Understanding everything, Nanami unites with her other self. Denying the bittersweet end of the fairy tale, Nanami alongside the Quest Dorm members aim for the happy ending, and went to the underground passage to open the gate to reach and help Souta. Souta, who is tired from all the battle, is saved by the Quest Dorm members, who arrived near Premium Ambriel.

The girls fight the Angelus Gemini, while Souta wonders why they came, feeling he has nothing to give them in return. Akane assures him that's not true, and eventually professes her love for him before she goes to fight. The Premium Ambriel absorbs the remaining creatures to charge a final attack, while Souta regains memory of his past as he tries to stop the attack. It is revealed that he once knew Akane, Kikuno, Megumi, Rin and Nanami at one point in the real world, but due to an accident, Souta chose to have a little girl, known as Laplace's Demon take their death flags and have them formed on him so they would survive. The price being the girls were to lose their memories of the event, and Souta and the girls were to forget having ever met each other while Souta despaired his life. Back in the present, Souta then uses his full power against the Premium Ambriel, and while his strength alone is not enough, he manages to destroy it with the help of the other girls coming and aiding him. During this time his death flag breaks. Souta then wakes up in the real world, where Number 0 speaks to him about the state of things and the truth about Sakura and Laplace's Demon. She also says that he was in an accident before he enrolled at a school, so she merged his conscious with many virtual worlds. Before she leaves, she states that the time he spent in the virtual world was but a flash in reality, hence nobody else shares his memories of it, including Nanami who dived into the virtual world to save him. Later, Souta comes across Quest Dorm and finds Akane there. After saving her from falling through the floor, Akane remembers him while Sakura and Laplace's Demon observe them. The episode ends with the girls in front of Quest Dorm smiling.