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This article contains plot details.
The game opens in Liberty City sometime in October, 2001. A man named Claude and his girlfriend, Catalina, rob a bank. They escape from the bank along with another male and a getaway driver, Miguel. A gunshot is heard from an alley, the unnamed male having been shot. Catalina points two pistols at Claude and says that he is "small time" before shooting him. Claude is left for dead while Catalina leaves with Miguel. Surviving the gunshot wound, Claude is arrested and sentenced to ten years in prison.
While being transported by a prison truck, Colombian Cartels stage an ambush over Callahan Bridge. The Cartels are after one of the prisoners and they inadvertently free Claude and another prisoner, named 8-Ball, in the process. However, a bomb goes off and kills everyone except for the two. The bomb also destroys part of the bridge, isolating Portland Island from the rest of Liberty City.
Claude is led to a safe-house by 8-Ball and is introduced to the Leone mafia family. The family has him do work and all the while, Claude finds himself fighting the Colombians. It turns out that Catalina is leading the Colombians. Salvatore Leone's wife, Maria, takes a liking to Claude and Salvatore decides to lead him into a death trap. However, Maria saves him and they flee to Staunton Island.
There, Claude begins working for Asuka Kasen, leader of Liberty City's Yakuza. Asuka turns out to be a close friend of Maria's and she has Claude kill Salvatore. Due to this, the mafia goes after Claude while Claude finds himself allying with other criminals during his work, one of whom is a corrupt police detective named Ray Machowski. Ray is an enemy of the Cartel and Claude later helps him flee the city.
Claude also meets a media mogul named Donald Love. Together, the two organize the death of Asuka's brother, Kenji, in order to start a war between the Yakuza and the Cartel. Donald later asks Claude to rescue a man who was kidnapped by the Cartel at the beginning of the game. Sometime after, Claude finally confronts Catalina face to face. However, she escapes death and leaves Miguel to be killed. Miguel is abducted by Asuka since she believes he knows something about her brother's death. Miguel begs Claude to save him but he remembers that Miguel betrayed him and leaves. Afterwards, Donald disappears due to unknown circumstances.
As the war with the Cartel intensifies, Asuka and Maria learn about Claude's history with Catalina. Due to this, they order him to fight many of the Cartel operations head on. This attracts Catalina's attention and results in Maria's abduction. During this, Asuka and Miguel are also killed. In exchange for Maria's released, the Cartel demand $500,000.
After Claude arrives at the Cartel's mansion, money in hand, Catalina tries to have Claude killed. Even without his weapons, Claude overpowers the ones who attempted to kill him. Claude fights his way to the City's Dam and finds Maria and Catalina there. Catalina attempts to flee by helicopter while also taking out Claude. He takes out the remaining Cartel members and finds a discarded rocket launcher. Shooting the rocket launcher at the helicopter, Catalina looks to have been killed. Maria and Claude leave the dam as the game ends. A news report can be heard in the background and as the screen fades to black, a gunshot is heard and Maria goes silent.
The game received universal critical acclaim upon its release. Several game review sites and publications called the game revolutionary. It has gone on to receive several awards.
The game remains very controversial due to its violent and sexual content. Due to its notoriety, Wal-Mart would begin checking IDs of people who wish to purchase M-rated games if they looked to be under 17. It was also named the "Most Offensive Game of the Year" by GameSpy.
After being released in Australia, the game was banned for a time. A censored version would then be released in its place.