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"A midwestern town in America: Raccoon City A solitary island far off in the sea: Rock Fort Island. An island that would become the second 'Raccoon City': Sheena Island. There are still many unanswered questions about these seemingly-unrelated yet intensely-traumatic events. Though it is believed that the international enterprise, Umbrella, was somehow involved, little is known as to the origin of this faceless corporation. When was it established...? By whom? And how was the t-Virus created? To uncover the truth, we must dwell deeper into the events which transpired in the beginning, before the Mansion Incident."
— Prologue

On the evening of 23 July 1998, an Umbrella-owned train, the Ecliptic Express, drives through the Arklay Mountains, home to several Umbrella facilities. Observed from atop a mountain by a mysterious man singing a choir song, the train is attacked by a number of leeches, which break through the windows and attack the occupants. Two hours later, Bravo Team flies over the same mountains. Part of the S.T.A.R.S. police special forces group, Bravo Team's mission is to investigate a series of unexplained cannibalistic murders and animal attacks centred on the region. The helicopter malfunctions and crash lands. While RPD pilot Kevin Dooley stays behind, Bravo Team searches the immediate area and finds a wrecked Marine MP vehicle. Its drivers are dead, and its prisoner - Marine 2LT. Billy Coen - is nowhere to be found. Operating on the assumption Coen killed his guards after the crash as a means of escape, Captain Enrico Marini has the team up to find him.

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Rebecca talks to a "man", who's face dissolves to reveal he is comprised of leeches.

Searching Raccoon Forest, Rebecca Chambers, the team's medic, finds the Ecliptic Express stopped in its tracks and with the lights out. In her search, she finds bloodstained seats. Checking a passenger, he wakes up and approaches her, with Rebecca soon being encircled by more men. Escaping them, she approaches the front of the train, and finds Billy. Billy is uncooperative, refusing to be detained, and is armed with a handgun he took from the MPs. After Billy leaves the carriage, Bravo Team member Edward Dewey jumps through the window. He is seriously wounded after being attacked by what he describes as "Zombies and monsters", and passes out, seemingly dead. He is then followed by mutant dogs which had chased him through the forest. Marini calls Rebecca on the radio, unaware of the monsters, and warns her he has uncovered further documents saying Billy was sentenced to death for murdering 23 people and was taken to a psychiatric hospital. Exploring the upper deck of the train, Rebecca finds another man sat in a dining room. Asking him if he is OK, the man dissolves into a pile of leeches, having been them mimicking human form. She is saved by Billy, allowing them to form trust. They see the strange man out on the mountain, surrounded by leeches while singing.

The train begins to move in what is discovered to be an operation by the Umbrella Security Service's Delta Team. They have been tasked by Drs. Albert Wesker and William Birkin in moving the train over for investigation into the attack. The men are then attacked by leeches and quickly Zombified, leaving no one in control of the train. As it moves through the mountains, the train picks up speed. Realising they might derail, Billy and Rebecca manipulate breaks on the front and rear of the train, killing the Zombie Edward in the process. The train slows down, but it is too late to stop an accident, as it drives through a cliff and into an underground train station, derailing in the process.

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Birkin and Wesker are confronted by the mysterious man, who accuses them of aiding in the murder of Marcus.

Billy and Rebecca escape the derelict train and explore their new surroundings. Heading up a ladder, they find themselves in a large building which used to be a school used by Umbrella Pharmaceuticals in the 1970s for educating its trainees. Evidence they find along the way points towards it being the site of biological weapons development pioneered by Umbrella co-founder Dr. James Marcus, the school's director. Their progress is watched on CCTV by Birkin and Wesker, but their feed is cut by the mysterious man from the training school's own security room, who knows they are watching him, and accuses them of betraying Marcus, admitting to contaminating the Arklay Laboratory as well as the train.

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Billy recalls the war crime he was blamed for.

As the two search the training school they uncover disturbing evidence of what happened here both in the 1970s and recently. While built to oversee training of gifted teenagers recruited by Umbrella, evidence points towards Marcus deliberately using the children as test subjects in inhuman bioweapons research, turning them into Zombies, with two-level basement containing a torture chamber covered in dried blood. Zombies roam the halls of the school. Some of them are those children, left alone for twenty years. Others belong to Birkin's investigation team, consisting of USS and technicians sent recently to refurbish the school for re-opening. Evidence of a dispute between Marcus and Umbrella's CEO, Dr. Oswell E. Spencer, Earl Spencer, is also discovered, pointing to Spencer trying to steal Marcus' research on the Progenitor Virus and the t-Virus Project. The mysterious man spots Rebecca on the CCTV, and sends out Marcus' Eliminator B.O.W.s to kill her. One tracks her down and bites her in the torture chamber, and during this confrontation the floor gives way, but she is soon rescued by Billy. During their navigation, Rebecca finally gives in, and demands Billy tell her the truth about what happened to him. He explains his Marine unit suffered casualties due to faulty intelligence when searching for a guerrilla base in an African jungle, and his CO ordered they fire on villagers. Refusing to take part, he was scapegoated by the unit, with a court-martial finding him guilty to cover-up the other scandals. Meanwhile, Birkin and Wesker begin their own plans. Operating on the theory the mysterious man is somehow Marcus himself brought back to life, he poses a considerable threat and must be dealt with. Birkin plans to set off the facility's self-destruct device to blow up the training school and the man along with it.

Moving on to a dilapidated church, Billy and Rebecca take an elevator down into an even more dilapidated laboratory used by Marcus for his t-Virus research. They find more evidence of Marcus' cruel research when Rebecca ventures upstairs. The auxiliary research room contains human victims preserved in fluid-filled capsules, with others containing organs harvested for closer study, there is a mutilated "thing" on a nearby operating table, and the morgue is over-capacity to the point Marcus was casually dumping body bags aside. Shelves everywhere contain poisonous chemicals used in his research, and an operating room is covered in blood from Marcus' surgical procedures on the teenagers. These rooms are populated by the Zombified investigation team once more, with signs pointing to a violent confrontation they experienced beyond simple leeches, with one infected man trapped within a gas chamber someone then switched on. Downstairs, Billy investigates Marcus' study, and finds a photograph of him in his younger years, exactly resembling the mysterious man. He theorises the man is his son or grandson. Ready to depart the laboratory on an underground cable car, Billy and Rebecca meet up and are attacked by one of Marcus' Eliminator B.O.W.s. Billy falls down the ledge and into an underground stream.

Heading out on her own, Rebecca makes her way to the Umbrella Chemical Plant, located downhill from the training school. Signs point to it also having been attacked by the mysterious man's leeches recently, and the facility's personnel are strangely absent. Heading down a large train elevator, Rebecca reaches NEST, the site of Birkin's own bio-weapons research. There, she runs into none other than Enrico, who has infiltrated NEST through the Arklay Laboratory's subway tunnel. He is confused why the rest of the team isn't there, and decides the two should head back to find where they went. Rebecca refuses to go, needing to find Billy. Enrico reminds he that he can't be saved either way, but gives in and lets her stay to find him while he returns to the lab. Soon after, Rebecca is confronted by the T-001, Umbrella USA's Tyrant prototype, which has been released by the mysterious man, but knocks it out quickly.

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Billy wakes up in a room full of the skeletal remains of Marcus' many test subjects.

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Queen Leech recounts Birkin and Wesker taking part in the USS assassination.

Heading into an adjoining water treatment plant, Rebecca finds Billy being dragged by the currents of the underground stream. Heading through the plant, the workers are found to have also been zombified, a combination of the mysterious man's leeches and the unsafe dumping procedure by Birkin of NEST's biowaste. Finding Billy washed onto decking, Rebecca helps him up. When he comes too, he finds the decking covered in skeletons, concluding Marcus had dumped them in the water too. As they explore the treatment plant further, they finally run into the mysterious man in person. He reveals to them the true origins of himself. "He" is the Queen Leech, a mutant test subject created by Marcus in 1988. Marcus was gunned down by the USS on Spencer's orders, with Birkin and Wesker sent in to steal his research data and died. Dumped in the water with Marcus, the leech entered his body and consumed his brain. Gaining his memories, Queen Leech sees itself as Marcus resurrected through divine work, and seeks to use its powers to bring hell to the entire world. Queen Leech transforms into a giant leech, abandoning its humanoid appearance, and faces off with Billy and Rebecca. They escape up a cargo elevator taking them back up to the plateau the training school was on, and face off the monster again in a large warehouse used for helicopter cargo transport. Realising the creature is sensitive to light, Rebecca manipulates the controls to the warehouse's retractable roof. Billy fires at the creature with a magnum, and it falls down the elevator shaft as the treatment plant explodes along with the training school.

Rebecca and Billy escape out into the open. Looking out from the cliff-edge, Rebecca spots the mansion Enrico told her about, and now knows where to go. Knowing Billy will have to be detained and sent on for execution for murders he didn't commit, Rebecca takes his dog tag and declares him dead. He agrees to faking his death, and walks out into the forest alone.

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