Full Metal Panic! is set on an alternate version of Earth where the Cold War did not end in 1991, and mecha called Arm Slaves first started to appear on battlefields in the mid-1980s. While this technology has significantly affected global politics, far less well-known is the existence of cryptic Black Technology, which has made things like invisibility screens, giant stealth submarines, and even drivers capable of converting their thoughts into energy possible. Fewer still know that the source of this arcane technology is the Whispered, individuals born with an intimate understanding of technology that far exceeds the average human. This rare trait makes Whispered individuals very valuable.

Within this world, a secret paramilitary organization known as Mithril has developed. Mithril is not beholden to any nation, instead employing mercenaries of all nationalities to fight with equipment that's a decade or more beyond anything else in the world. They secretly act to ensure global stability, from taking out drug factories to dealing with terrorists and so forth. They also seek to protect the Whispered from those who would exploit them, which is what leads our two protagonists' paths to cross. Meanwhile, a terrorist organization known as Amalgam that's become a match for Mithril in technology acquisition has been making insidious moves behind the scenes.