The game's story, written by Hollywood duo Bradley Thompson and David Weddle, draws on the alternate (black-and-white) ending of the second film, but gradually takes off in its own direction, specifically on board the wreck of the ship Derelict. Lieutenant Ellen Ripley is dead, and none of the crew members of the Sulaco ship from the colony characteristically named Hadley's Hope (now more like an Oasis of Slime and Acid) have escaped.

The history of the Marines' futile resistance to the monstrous deep-space hunters on the moon LV-426 is largely unknown. With little first-hand accounts, the only way to investigate the unexplained disappearance of Hicks, Vasquez, Hudson, and the rest of the unit is through the ship itself, now drifting through space, the hibernation chambers opened by an alarm (a fire on board), and the ship's inability to contact Earth.

The setting is first the USS Sulaco spaceship (Aliens) and then the found wreck of an abandoned vessel Derelict. Plus new environments designed specifically for the game. There is no central character in the single player, each mission you can play as a different member of the four members of the American Colonial Marines unit. Some missions you will complete alone, others in the company of a team. The artificial intelligence is not scripted, which will result in unexpected situations. You will probably also encounter living representatives of the ancient race of Space Jockeys.