The ruler of Gruklovia, Gzar Theodore Malik, manipulated a woman named Lucrecia Mux to use her psychic abilities to enact cruelties on his own people. This eventually unleashed darkness within her soul, releasing her inner demon known as Maligula.
Maligula destroyed the Valermo Dam, creating a disaster that killed hundreds of Gruklovians. The top-tier Psychonauts, known as the Psychic Six, defeated Maligula, and the Malik family fled the country.
Twenty years later, the missing son of Gzar Theodore, Gristol Malik, discovers that Maligula is alive. She is trapped in a psychic construction created by the leader of the Psychonauts, Ford Cruller.
He discovers that a half-Gruklovia boy from a Gruklovian refugee family possesses great psychic ability and uses him to unknowingly free Maligula in the hopes she will help the Malik family return to power.
The walls around the construct begin to crumble, and Maligula is able to construct a disguise and give the boy, ten-year old Razputin Aquato, a brochure about the Psychonauts psychic summer camp known as Whispering Rock.
Raz sneaks into the camp, stops a plot by a counselor named Coach Morry Oleander to take over the world, and is given a commission as a Psychonaut by Agents Milla Bordello and Sasha Nein as well as the now-psychologically-fractured Ford Cruller.
Gristol Malik manipulates an insane psychic dentist named Caligosto Loboto to put his brain in the head of the grand head of the Psychonauts, Truman Zanotto.
The Psychonauts learn that Truman Zanotto has been kidnapped. Agents Nein and Bordello, Coach Oleander, and Raz board the Psychonauts jet to save him. Truman's daughter Lili, who is also Raz's new girlfriend, joins them as well. Unknown to them, Loboto sneaks onto the jet as well.
They travel to the Rhombus of Ruin, discover that Loboto snuck onboard, and also learn that the insane dentist was involved in the kidnapping of Truman Zanotto. The rescue Zanotto, not knowing that he is actually Gristol Malik, and travel to Psychonauts headquarters.
The Psychonauts learn that someone studied how to resurrect Maligula. Going into crisis mode, Sasha interrogates Loboto hoping to discover for who he was working and Milla uses her psychic powers to try to locate the people trying to bring back Maligula.
Raz enters the Psychonauts headquarters only to learn that Sasha and Milla didn't actually have the authority to make him a Psychonaut. Raz is, however, made an intern and is placed under the supervision of the head of the mailroom, Nick.
