Diablo III's storyline takes place 20 years after the events in Diablo II, where a handful of heroes saved Sanctuary from demonic invasion thanks to their defeat of Baal, one of the three Prime Evils and the Lord of Destruction, and the destruction of the Worldstone (and with it Baal's armies).
A Falling Star
The story opens on Deckard Cain and his niece Leah exploring an ancient prophetic text in the Tristam Cathedral. A star falls from the sky, lands on the cathedral and opens a giant crater in the earth that swallows Cain. Gameplay begins when the protagonist begins investigating the star that destroyed the cathedral.
Leah and the protagonist rescue Cain from the crater and the protagonist begins a quest to reach the star. The protagonist is first tasked with defeating the former ruler of Tristam, King Leoric, who has come back from the dead as the Skeleton King and is now commanding an army of the undead. After defeating Leoric, a stranger who fell with the star is discovered. The stranger has lost his memories and can only recall a sword he lost when he fell, that broke into three pieces.
The Death of Deckard Cain
The protagonist recovers two parts of the broken sword but the remaining pieceis intercepted by the demon witch Maghda and her Dark Coven. Leah destroys the coven using magic and Maghda retaliates by killing Cain who manages to repair the sword before his death and implores the protagonist to return the weapon to its rightful owner. Maghda flees with the stranger but the protagonist pursues the pair and rescues the stranger, returning his weapon to him. The stranger recovers his memories and is revealed to be the arch angel Tyreal, the Aspect of Justice who has become a mortal and embarked on a quest of his own to try to save the world of Sanctuary from the demon lords Belial and Azmodan.
The Black Soulstone
The protagonist, Tyreal and Leah then journey to the city of Caldeum. The protagonist then travels alone to Khasim Outpost to avenge Cain's death by killing Maghda and then returns to Leah who has learned that her mother, Adria, whom she believed to be dead, is trapped in the sewers below Caldeum and enlists the protagonist to help her rescue her. Adria then informs the protagonist that he must find the Black Soulstone in order to trap the souls of the Lords of Hell. The protagonist learns of the location of the Black Soulstone by communing with the soul of the evil Zoltun Kulle, a now-dead member of the Hoadrim. The soul of Kulle tries to keep the stone for himself but the protagonist prevails.
The Lord of Lies
The city of Caldeum is attacked by Belial, the Lord of Lies, one of the demon lords. Adria and Leah defeat Belial and entrap him in the Black Soulstone. Leah then has a vision that informs her that the demon lord Azmodan is invading Sanctuary as well.
The Lord of Sin
Tyreal, Adria, Leah and the protagonist find Azmodan and his army attacking the land of Bastion's Keep. The protagonist defeats Azmodan with the help of the sword of Tyreal and Leah seals the demon lord in the Black Soulstone which now holds all seven of the Lords of Hell. The protagonist seeks to destroy the stone but they are betrayed by Adria, now revealed to be a servant of the lord Diablo. Diablo possessed the body of Leah's father Aidan and he is, in fact, Leah's father. Leah is sacrificed by Adria in order to revive Diablo and Diablo is resurrected as the Prime Evil, the lord who owns the souls of all of the Lords of Hell. Diablo then sets about destroying the High Heavens.
Tyrael is in despair against the force of Diablo. The protagonist rescues Auriel, the Aspect of Hope and restores hope to the forces of Heaven. Tyrael regains his faith and together with the hero, they defeat Diablo and the Black Soulstone falls from the High Heavens. Tyreal continues as a mortal being, forging a union between the humans and the angels.