Sometime before the Silence, the Ancients ran an experiment that drove the entire population of a planet insane. The sole survivor was teenaged Rothbard, who escaped with a cache of technology through a portal to Enroth. There, he studied under the Seers, learned powerful fate-binding magic, and combined it with technology, becoming the Artificer and achieving immortality. He then disappeared to begin plotting his revenge.

Hundreds of years later, on the world Carracia, the prince Richard loses a hand. Rothbard, under a disguise, appears, and presents him with a prosthetic, which grants him great power. Richard takes the name “King Ironfist” as a result. He is unaware, however, that the Iron Fist contains a powerful fate-altering spell which is now present in Richard's bloodline. Over the next few centuries, various strife causes members of the Ironfist family to split off, somehow finding themselves on the worlds of VARN-4 and the tentatively named World X. Later, an Ironfist flees from VARN-4 and stumbles through a portal to Enroth, where he becomes king. This part is canon, and is elaborated in HoMM I.

Back on Carracia, events cause Lionel Ironfist, the Warlord (unrelated to the one in M&M VI), to flee the castle, accompanied by an elite troop of Dragon Riders. They somehow find themselves on Enroth. Proclaiming himself Lord Ironfist, he quickly finds himself in conflict with the other Ironfist, namely King Roland, and begins a short campaign to unseat his distant cousin. However, across the four worlds of the Ironfists, the leaders begin have visions inspiring them to construct the Gem Monoliths, structures of great magical power. On Enroth, Roland orders the construction of the Torres Zaphiri, or Sapphire Monolith, which can send powerful lightning great distances. Lionel's forces flee, using powerful weather spells to cover their retreat, but find the portal by which they arrived sealed. Trapped on Enroth, they board ships and search for a more hospitable land. A few Dragon Riders are left behind, and become raiders, as they are later seen in M&M VI.

Lionel's forces discover the island ruled by the Seers. After many trials, they manage to open the portal to the home planet of Rothbard, now a wilderness inhabited only by barbarians. A few seers accompany them, and they quickly establish a new kingdom. Lionel begins receiving visions and gets an urge to construct the Emerald Monolith. However, the seers, with a combination of scrying, observing the ruins around them, and tribal memories of the powerful outsider who had crossed the portal a thousand years earlier, combined with a possible appearance by Rothbard himself, cause them to realize the truth: that the oddysseys of Lionel and his relatives, their subsequent success, and the urge to construct the Monolith, were caused by the fate-binding spell placed on the Iron Fist. Rothbard wishes to place several worlds in a “time-bubble” free from Ancient or Kreegan interference. To do this, he needs the Gem Monoliths constructed on five different worlds, and is using the Ironfists to accomplish this. Once completed, he will activate the spell, destroying the monoliths in the process. However, a random one of the five worlds will be destroyed several years later by seemingly unrelated events.

At this point, the player may choose. He can either rebel against Rothbard, and journey to each of the other four worlds to destroy the Monoliths, eventually concluding with invading the home castle on Carracia, finding the Iron Fist in the armory, and destroying it. Or, he can choose to work with Rothbard. However, in that case, a team of adventurers armed with laser rifles appears, and tries to defeat the player. Either way, the monoliths are destroyed, and the one on Enroth is later replaced with the network of Dragon Towers seen in M&M VI, with Enroth itself being destroyed many years later (see the HoMM IV intro). Thus, the canonical choice is ambiguous.