The original Arcade version of Power Instinct 2 released in Japan in October 1994. The game adds 5 new characters to the series but doesn't retain the extra modes added to the console ports of the previous title. The game was ported to PlayStation in Japan with an additional mode and characters related to the next Arcade release for the series, Goketsuji Legends.

Oume Goketsuji, Leader of the Goketsuji clan for the last 60 years, finally was defeated by her younger sister, Otane, the day where she surpassed her older sister finally had arrived. One night, Oshima Goketsuji unexpectedly appeared in front of Oume and offered her help to take revenge of Otane. According to the rules of the clan, if the leader dies or quits, one new tournament should be held immediately to find a successor. That same night Oshima and Oume sent their servants to dispose of Otane, so while Otane slept, she was kidnapped and thrown to the ocean. Next day Kuroko found a letter supposedly written by Otane, where she declined to her right to be the leader of the clan. One week later all the competitors from the previous tournament and other family members were convoked to be informed about Otane's decision and the beginning of a new tournament.