The second installment of the game is based on a story that was related briefly in the first game and the original movie. It is the tale of a Union soldier during the American Civil War, who is mortally wounded in battle and left for dead. As he slips into unconsciousness, he hears a mysterious voice say, "Your time is not up yet, soldier. I have need of you yet!". Sure enough, his time is not up - a young girl called Robin Weaver finds him and helps him back to the isolated house where she lives with her grandmother, Bess.
While he heals, he has a number of hallucinations and a near-death experience, in which he learns, but does not fully comprehend, that Robin is in danger. When he awakes, it is discovered that he is suffering from amnesia, and cannot remember who he is. The only clue to his past is the uniform he wears. Since he cannot remember his name, Robin's grandmother, a devout Christian, temporarily names him Lazarus.
Robin's grandmother, with the soldier now in her debt, informs him that Robin has disappeared into the woods and begs him to find her. She is convinced that "the woods have her". The soldier regards this as paranoia, and thinks that Robin has simply gone to play in the woods and is late in returning. Bess is insistent, however, and the soldier reluctantly agrees to help in the search for Robin.
As the game progresses, Lazarus recalls elements of his past, by means of flashback game sequences, which slowly explain how the current events come to be.