The main goal in this Tomb Raider game is to obtain the Dagger of Xian. The dagger was previously used by the Chinese Emperor to turn himself into a dragon by stabbing the dagger into his heart. He was eventually defeated when a group of Tibetan monks succeeded in removing the dagger from his heart and sealing it inside of the Great Wall for safe keeping.
The game begins with Lara discovering the entrance chamber to the holding place of the Dagger. As soon as she notices the key to the chamber is missing, she is attacked by a man who claims to work for Marco Bartoli, the leader of the Venetian mob. Lara soon discovers that Bartoli and his criminal associates have founded a secret cult obsessed with the dagger, and she proceeds to track him through Venice, his hideout, and then eventually makes it on to his private plane on it's way to an oil rig in the Adriatic Sea.
Lara learns for that cult is excavating a sunken ship by the name of the Maria Doria, and a captured TIbetan monk named Brother Chan informs her that the ship carries within it an artifact called the Searph, which serves as the key to an artifact called the Talion, which in turn is the key to Dagger of Xian. Two keys are apparently safer than one. Chan also tells Lara that he is from an ancient order of monks who live at the Barkhang monastery and have sworn to protect the Tallion. Chan also lets on that the Barkhang monks were ones who sunk the Maria Doria in the first place . However, before Chan can tell Lara any more information, he is shot by Bartoli, prompting Lara to dive into the ship and retrieve the Seraph.
Key number one in hand, Lara journeys the Barkhang monastery, and with the help of the monks who live there, retrieves the Talion (key number two) and then rushes back to the Great Wall. After an exciting car chase with Bartoli, Lara opens to door of the Dagger of Xian's chamber. However, before she can snatch up the dagger, Bartoli puts it through his heart and turns into a dragon. In the final boss battle, Lara succeeds in pulling the dagger out of Bartoli's heart, thus saving the day... but only for a moment! In the surprise epilogue, the remainder of Bartolis' men track down Lara at her mansion and invade it.
New gameplay features that Tomb Raider II introduced were new weapons,extra moves, vehicles, larger levels, more enemies, having more human enemies, and lighting. The game also introduced the ability to save anywhere and anytime the player wished. New abilities for Lara included climbing ladders and perform mid-air rolls in the opposite direction in which the player is standing.