Handsome Jack has taken over Pandora, going so far as to claim that he found the Vault and killed the Destroyer. He now rules over Pandora with an iron fist, building a satellite between Pandora and its moon, so he can keep an eye on everything that happens on the planet. He is able to send reinforcements down to Pandora from his satellite at any time.
The game begins with the main character participating in a gladiator tournament run by Handsome Jack to win some rewards. The character wins, but Handsome Jack sees this as a threat to his popularity, so he doesn't give them the reward, and he leaves them for dead in the tundra. The Guardian Angel from the first game appears to the player and says that Handsome Jack must be killed, so the player needs to go and rescue the main characters from the first game, who have been captured by Handsome Jack and the Hyperion corporation.