Nanahara's base is destroyed and many of his followers killed, but he and Taku manage to escape. We see the two reunite with their fellow survivors, including Nakagawa. The two men part ways, promising to rise again when the time is right.
The film begins with Shuya Nanahara(Tatsuya Fujiwara), in military garb, declaring war on all adults (it seems most of the world has become as fascist as Japan). We then watch as two skyscrapers in Tokyo are blown up and collapse. As a result of Nanahara's attack, the Japanese government installs the Battle Royale 2 program. We also learn that Kitano's daughter Shiori Kitano (Ai Maeda) has recovered her father's painting of Nakagawa from the first film and, seemingly regretful of her cruel treatment of her father, enrolls in the Battle Royale program to try and learn more about what happened to him.
Shiori is transferred by the program to a school for wayward or orphaned youth (though only she knows they are about to be selected). On a bus ride, many of the students sign a rugby ball as a sign of friendship. The class is drugged and, when they awaken, have collars around their necks.
A government agent/sensei named Riki Takeuchi (actor has the same name as his character) informs them of the details of Battle Royale 2. Riki also implies that the Americans are in control of the Japanese government and Battle Royale program. He says that Nanahara is a terrorist whose forces reside on a well-guarded island. He says that, rather than send in the military, the children will have 72 hours to storm the island and kill Nanahara (or else, their collars will explode). After one student, Shintaro, refuses to participate, Riki kills him. This causes another student's collar to explode, killing her. Riki explains that the students are paired so if one dies, so will the other (thus forcing them to keep urging each other on). He also says that they must continue to assault Nanahara's base, or they will be caught in a danger zone where the collars of everyone therein will detonate. Riki arms the students with various military weapons and manuals, and they are loaded on rafts to go to the island.
Upon arrival, many of them are killed due to the heavy artillery, trip wire bombs, and land mines utilized by Nanahara's forces (some students are also caught in a danger zone). Ultimately, a few dozen manage to make it to Nanahara's base, where he realizes they are wearing collars and are part of a Battle Royale program. One of Nanahara's generals orders the kids to stand down, but one student's family was killed in Nanahara's tower attacks, and he opens fire. All but a handful of the schoolchildren are then killed before cooler heads prevail. Shiori also threatens to kill Nanahara, but ultimately backs down. Nanahara uses an EMP blast to neutralize the collars, and he frees the remaining school children.
The leader of the remaining Battle Royale students is a young boy named Takuma "Taku" Aoi (Shûgo Oshinari). Though he detests the adults, he also believes that Nanahara's methods are reprehensible. Nanahara explains to them that after he and Nakagawa escaped from the game, they arrived in a country (seemingly of an Arabic nature) where the people had been torn apart by the war-mongering forces of the West. He said that though the children there had nothing, they were still happy because they had freedom. After witnessing this, Nanahara adopted the Kalashnikov rifle as a symbol of resistance for all the children who are exploited by adults. He has been joined by other survivors of the Battle Royale program, and they live freely on this island. Slowly, Taku and Shiori come to accept Nanahara's ways.
On Christmas day, Nanahara sends out a plea for world peace that enrages those in power. The military launches an all-out assault on the base. Nanahara sends the Battle Royale students, as well as some of the younger children and those not wishing to fight, to escape through a secret tunnel. Nanahara also gives the Kalashnikov to a younger child so that he may carry on the cause. Several of the Battle Royale 2 students decide to return and fight, including Taku and Shiori. Though the military suffer heavy casualties, most of Nanahara's followers are killed. Shiori dies in Nanahara's arms, comforted by the revelation that Nakagawa gave her father the love and peace that she refused him. Riki has also switched sides to join Nanahara, inspired by their hope for a better future and the expressions of friendship he found on the class rugby ball. Riki dons the battle royale collar, and is killed when it explodes. The battle scene ends with military planes carpet-bombing the island.
We cut back to the nameless country where we see the escapees from Nanahara's island. A truck drives up and out steps Nanahara and Taku, having miraculously survived. One of the people waiting for them is Nakagawa, who Nanahara had kept away to spare from the violence. Nanahara's young disciple also returns his Kalashnikov. The group parts ways, with some following Taku and others travelling with Nanahara. The two men agree, however, that when the time is right, they will come together again for another revolution.
Thanks Evan B!