Two years after the events of the first game, the protagonist receives a special mission from Elder Kai, which involves correcting history after it has changed. On the way there, they meet the Supreme Kai of Time, a deity who watches over time, and her bird, TokiToki. After meeting Elder Kai, they are granted their first mission, which is to correct Goku's battle with Raditz after he's been enhanced by dark magic. Meanwhile, Towa and Mira, the people who've caused history to change, have gathered allies, Turles, Lord Slug and a mysterious Masked Saiyan, from different parts of the timeline. During the Attack of the Saiyans Saga, Turles attempts to intercept Goku to prevent him from assisting the Z Fighters against Nappa and Vegeta, only to be stopped by the combined forces of the Time Patroller and Goku. During the battle, Trunks and his partner, the protagonist from the first Xenoverse game, try to capture Turles, but he escapes before the Time Patroller can stop him. The protagonist then returns to the Time Nest after defeating Great Ape Nappa and Great Ape Vegeta, correcting history. There, they are introduced to Trunks and his partner, and it is announced that TokiToki is laying an egg, which gives birth to another universe.

The game is very similar to its predecessor in terms of gameplay, it is mostly set in a series of 3D battle arenas mostly modeled after notable locations in the Dragon Ball universe, with the central hub being an expanded version of Toki-Toki City, called Conton City. As reported by the creators of the Game, Conton City is seven times larger than Toki-Toki City. Players are able to freely traverse this new hub world, and in some areas are even capable of flying around, however this feature will not be available from start, instead being unlocked. Players will also be able to travel to other hubs such as the Namekian Village and Frieza's ship. Some skills will have to be learned through masters, like the previous game. However, some masters will be found exclusively in these extra hubs. Xenoverse 2 is the fourth Dragon Ball video game to feature character customization. Players are able to choose from the five races of the first game: Humans, Saiyans, Majins, Namekians and Frieza's race. The game also features race-specific quests, minigames and transformations (the latter of which was only available to Saiyans in the first game, via the Super Saiyan forms). Players also have a much greater role in the story, as some decisions will have to be made by them. Multiplayer servers are now able to hold up to 300 players at once. The game also has a training mode called Training School. The player can use different kinds of ki blasts (Power, Homing, Rush, Paralyze and Bomb), and the ki blast type depends on the player's race or Super Soul.