Phantom Lord's Master, Jose Porla, sends Gajeel Redfox to severely damage the Fairy Tail Guild while they are away, forcing them to use a basement, though this is not enough to push Makarov to war with Phantom Lord. However, Gajeel's surprise attack on Fairy Tail's Shadow Gear ignites Makarov's fury and he proclaims war with Phantom Lord.
Some time later, in Oak Town, inside Phantom Lord's guild building, its members are bragging about how Gajeel defeated Shadow Gear, but Fairy Tail breaks their party when they break through the door announcing their arrival.
Natsu Dragneel starts the battle by attacking several members of Phantom Lord and yells at the members of the enemy guild, challenging them. Some members of Phantom Lord tell Natsu not to get carried away. Gray Fullbuster attacks other members of Phantom Lord with Ice-Make Magic and Elfman Strauss attacks some other enemies with Take Over: Beast Arm. Also Cana Alberona, Loke, Nab Lasaro, Max Alors and Vijeeter Ecor attack other members of Phantom Lord with various different types of Magic.
Macao Conbolt uses Purple Net to grab some enemies and Wakaba Mine uses Smoke Crush to hit them. Alzack Connell uses Spark Shot to attack some other members of Phantom Lord, Boze tries to attack him from the back, but Bisca Mulan shoots him before he can, then she uses Homing Shot.
Other members of Phantom Lord try to attack Makarov, but he injures them moderately with Giant. One of them calls Makarov a monster and he responds that they had messed with the children of this monster and to not think for a second that they will be protected by human laws. Phantom Lord's Mages start panicking and talking about how insanely strong they all are in Fairy Tail. Reedus Jonah uses his Pict Magic and Laki Olietta uses her Wood-Make to attack enemies. The members of Phantom Lord find Happy and say that they've finally found someone they can beat, but he proves them wrong. Makarov calls for Jose to show himself and Erza asks where Gajeel and the Element 4 are. Gajeel watches the fight develop from the ceiling and mentions that he didn't expect Jose's plan to go so well.
Some Mages of Phantom Lord attack with Fire Magic and almost hit Laki, but Natsu eats the fire and saves her. Those Mages get scared of Natsu's Fire Dragon Slayer Magic and Natsu uses Fire Dragon's Roar to attack them. Gray attacks with Ice-Make: Lance and Erza attacks with her Black Wing Armor. Laki uses Wood-Make: The Distance between the Two is Forever, Alzack uses Mud Shot, and Bisca requips to her Magic Shotgun and attacks with Wide Shot; Cana uses her Thunderbolt's Fate whilst Loke uses Twister.
Elfman is attacking different members of Phantom Lord while screaming that being a man is what being a man is all about. Phantom Lord's members are confused about what he is saying but they're still amazed of his Magic. One of them says that he is Beast Arm Elfman as he uses Beast Arm, a Magic that allows him to take over the arms of monsters he has defeated in the past. Makarov puts Erza in charge and says that Jose is probably on the top floor. As soon as he leaves, Gajeel says that now that the biggest threat is gone there is no need to hold back, and he comes down to join the fight.
Gajeel attacks Nab and several members of his guild with him, provoking the Fairy Tail members to proceed and attack him. Elfman and Gajeel fight before Natsu intervenes. Meanwhile, Makarov has a fight with Elemental Four's Aria, but he loses and falls all the way to the bottom floor completely voided of his Magic Power.
With Master Makarov's defeat, Phantom Lord regains their spirit and begin turning the tides of battle. Erza commands Fairy Tail to retreat; they complain, but Erza is firm on her decision, saying that they cannot defeat Jose without the Master. Gajeel and Aria talk about how Lucy Heartfilia has been captured and Natsu hears their conversation. Natsu takes one member of Phantom Lord to ask him some questions and Fairy Tail retreats.
Natsu saves Lucy when she jumps from Phantom Lord's sky prison and takes her back to the guild. Lucy thinks that everything Phantom Lord did to Fairy Tail is her fault. Later, Phantom Lord proceeds to attack Fairy Tail with Phantom Lord's transformed building, Super Mage Giant Phantom MK II.