Sakura Wars 3 takes place following the events of Sakura Wars 2. Series protagonist Ichiro Ogami joins the newly formed Paris Assault Troupe to train their own Flower Division, an all-female unit dedicated to fighting supernatural threats against the city while maintaining their cover as a cabaret act. The Paris Assault Troupe must learn to work together to defend their city against a series of mysterious phantoms seeking vengeance against Paris for their fallen ancient civilization.

Sakura Wars 3 opens in Paris in 1926. Imperial Japanese Army Lieutenant Ichiro Ogami arrives to train a new fighting unit established by the government to combat supernatural threats. Dubbed the "Paris Combat Revue" and modeled on Ogami's original group from Tokyo, the all-female group maintains its cover as a cabaret act at the nightclub Les Chatte Noir. Their main fighting unit is called the Paris Division, its members acting as both cabaret stars and magically-imbued warriors able to pilot Koubu mecha. Its initial members are clumsy nun Erica Fontaine, and cold French noble Glycine Bleumer. In his efforts to build the group, Ogami helps recruit three more members—Coquelicot, a Vietnamese traveling circus performer; French-Japanese widow Hanabi Kitaoji; and Romanian master thief Lobelia Carlini. As the Paris Division grows, Paris is attacked by a group of black magicians dubbed the Phantoms of Paris, many of whom torment members of the unit in attempts to break them. The Paris Phantoms are revealed to be controlled by the clown Salut; the last of an ethnic group who communed with Paris' dead and were hunted to near-extinction, Salut intends to use the Great Oak Tree, a god-like being which guards Paris, to resurrect his people using Paris' population as sacrifices. Using their united spiritual power, the Paris Division are able to defeat Salut, restoring Paris and the Great Oak Tree. Alongside these events, Ogami experiences Parisian city life and culture while training the group to function with the same ability as the Imperial Combat Revue's Flower Division alongside their roles as cabaret performers at Les Chatte Noir. During his interactions with each member, he has the option of pursuing a romance with them. The flow of events is broken slightly when the Flower Division arrives in Paris during summer holidays, and demonstrates their comradeship and unity to the Paris group during a dance competition. Following Salu's defeat, Ogami decides that the group is able to fend for itself and sets off on his travels once again. The final scenes alter depending on whether Ogami pursued a romance with a member of the Paris Division.