The war on the western continent Europa ended in the Republic's victory. However, the Guylos Empire succeeded in pulling out most of its main forces thanks to the brave efforts of the Elephanders at Nikushi base. Gunter Prozen, the leader of the Empire, ignored the Republic's request for a ceasefire and made haste in regrouping his forces.
The Republic knew that to end this war, they would have to defeat Prozen. The Republic HQ decided to attack the Empire's homeland, the Dark Continent Nyx. In preparation, they took steps to beef up their naval and air forces. However in relation to their air force, there was a problem: Storm Sworder, which is equipped with the Organoid system, is very difficult to mass produce. To solve this problem, the Republic's HQ ordered the resurrection of Raynos, the main Zoid for the air force in the era of the old war. While not as good in combat as the Storm Sworder, the Raynos was significantly cheaper to produce plus it was still somewhat better than the Guylos Empire's Redlers.
In preparation for the coming attack by the Republic, the Empire started to beef up its naval forces. The empire equipped its naval forces with Wardick, also known as Warshark, a Zoid that was the equal of the Republic's Hammerhead. This small, fish-shaped Zoid was invincible in the waters and capable of surviving deeper in the ocean than any other Zoid. One after another, Wardick zoids quietly left the Empire's harbors to attack the Republic's forces without the Republic's knowledge.
With both sides ready and deploying massive naval and air forces into combat, a sharp sea battle ensued between the Republican Fleet, consisting of the Ultrasaurus, Hammerhead, and Barigator Zoids, and the Imperial Fleet, consisting of the Warshark, Sinker and Brachios Zoids.
The sea battle turned out to be a total disaster for the Helic Republic. The remnants of the Republic Fleet, defeated in the large sea battle while attempting a landing on the Dark Continent, fled into the electro magnetically-charged Daras Triangle while avoiding the pursuing Imperial Fleet. The Fleet takes heavy damage from a raging plasma storm, but this is in fact the new Empire model Zoids Demantis and Maccurtis at work.
As a result of the risky, but successful retreat the Helic Republic miraculously discovered a safe route through the devil's triangle Daras. Using this to their advantage, the Helic forces send another landing force through the triangle Daras to the Dark Continent, hoping to catch the Guylos forces by surprise.
It was during this time of sea battle between the Guylos and Helic forces that a mysterious new force appeared on the Dark Continent. They were known by some as the Iron Dragon Cavalry, and by others as the Eisen Dragoons. Whatever their name, they fought both the Guylos Empire and the Helic Republic. With such Zoids as the Dark Spiner, Killer Dome, Guntiger and Grounchar at it's disposal and led by the advanced Berserk Fuhrer, the Iron Dragon Cavalry proved to be a terrifying foe, making particular use of communications jamming technology.
Despite the efforts of the Iron Dragon's sea forces and the Imperial fleet, the Helic Republic's beachhead forces finally landed on the Dark Continent. Spearheading the attack was the quick attack force "Lightning Division". The Lightning Division, consisting of large quantities of Liger Zeros, Shadow Foxes, and Command Wolf AC's, defeated one after another of the Empire's defense forces as the Empire's defense forces had already been weakened by the attack of the mysterious Iron Dragon Cavalry forces. Heading towards the Empire's capital of Beruhama, the Lightning Division continued its fast attack. However, the Iron Dragon Cavalry finally showed up in the path of the Lightning forces' advance. "The Republic's forces are stronger than what we imagined. In order to restore the balance of power between the two countries, we'll have to destroy you", the Iron Dragon Cavalry forces said to the Lightning Division. Incapacitated by the jamming of the underground Zoid, Grounchar, the Lightning Division's zoids were unable to respond to the Iron Dragon Cavalry's attacks and were destroyed one by one by Berserk Fuhrer. Just when the Lightning Division was on the verge of complete destruction, they were saved by the newest artillery Zoid of the Republic, Gunbluster.
The Iron Dragon Cavalry forces dissapeared for a brief time just as mysteriously as they had appeared, possibly retreating from the Helic Republic's artillery forces which had rescued the Lightning Division and were now advancing once again on the Guylos Capital City of Beruhama with the aid of more Republican Zoids, including the giant Mad Thunder. Most likely though it was because the Imperial army had also re-grouped and were advancing from Beruhama against the Republican army with a newly reconstructed Death Saurer waiting to be deployed.
Soon enough a battle took place just southeast of Beruhama in which the Guylos Empire's forces tried to destroy the Mad Thunder to allow the Death Saurer to wipe out the Republican forces later on while the Republican forces fought to defend the Mad Thunder to allow it to knock out the Death Saurer when they eventually reached the captial. The Empire's forces deployed their newest weapon, the Liger Zero X, to destroy the Mad Thunder. With the help of the high-performance Zoid, Konig Wolf, the Republic's army defended Mad Thunder against Liger Zero X's attack.
But, as the time for Mad Thunder and Death Saurer's battle drew nearer a revolt had taken place in the Empire's capital, Beruhama, initiated by the Prozen Knights. The PK army, led by Gunter Prozen himself, had planned for a coup d'etat in the empire's capital for some time. Now that plan was complete. To make matters worse, the Iron Dragon Cavalry had reappeared in the least likely place, the Central Continent, and were heading for the Republic's capital.
The regular Imperial army headed back to the capital and attempted to retake the city. However, due to the attrition from their war with the Republic, they were unsuccessful. The Republic's army stepped in to help them. An agreement was made and the two armies allied together to take down Gunter Prozen, the villain who had started the war in the first place.
The battle was the most vicious of it's kind. Gunter Prozen had taken control of the Death Saurer and used it in the defense of Beruhama, sometimes destroying parts of Beruhama in order to eliminate this or that division of the Imperial or Republican armies. Ultimately, through the brave actions of several pilots and with a little bit of luck the Death Saurer was defeated and Gunter Prozen dissapeared. The remnants of his PK army fled the city and were hunted down by loyal Imperial troops. Though hostilities remained between Republican and Imperial troops who had been fighting each other only days before, an imposed peace had been agreed upon between the leaders of the armies. When news arrived of the fighting in the Central Continent, several Republican army and fleet divisions were sent back, though many remained to keep the Guylos forces in check.
Meanwhile, there was still fighting in the Central Continent. The Iron Dragon Cavalry laid siege to Helic City. During the fighting, the Republic's president escaped from Iron Dragon's siege, met up with the remaining Republic forces near the city and headed north to join up with the divisions returning from the Dark Continent. The elite Iron Dragon army's Zoid, Guntiger went hot in pursuit. To protect the president the Republican forces sent out the Saberlion to intercept the Guntigers. These smaller, sleeker, newtype Zoids continued to skirmish as the Iron Dragon Cavalry continued pushing deeper into the capital, though urban fighting proved far different and far more difficult than the fighting the Iron Dragon Cavalry was used to in the Dark Continent. Soon enough the President returned to the Capital with a large Republican army and the Iron Dragon Cavalry, exhausted as it was, made another quick retreat. Mysteriously, the Republican divisions sent in pursuit were unable to locate the Iron Dragon Cavalry afterwards.
With the defeat of Prozen and his Knights in the Dark Continent and the defeat of the Iron Dragons in the Central Continent, the cities of Beruhama and Helic returned to the control of the Guylos Empire and the Helic Republic respectively. In due time the Guylos and Helic diplomats and leaders agreed to a lasting a peace treaty. But they went even further than that. They also agreed to an arms exchange and, probably most important of all, the creation of a new, independent organization to maintain peace and order throughout Zi with the joint support from the Guylos Empire and the Helic Republic: The Guardian Force.