The opening sequence shows the player skating at his/her hometown (the New Jersey neighborhood from the previous game). A van shows up in the middle of the ramp and the player slams into the van. Two people wearing hockey masks kidnap the player and take him/her to a dark room with other skaters like Eric Sparrow, Bob Burnquist, Mike Vallely, Eric Koston, Rodney Mullen and Chad Muska. Then, Bam Margera and Tony Hawk explain their plans for the first annual World Destruction Tour, a "sick-as-hell" around-the-world skateboarding tour. The final goal of the Tour is that the losing team has to pay for everything. The skaters then split into two teams - Team Hawk and Team Bam - and the player, who was left for the final drafting round, joins Team Hawk because Bam had chosen Paulie "Wheels of Fury" Ryan, an obnoxious kid in a bodycast who rides on a motor-powered wheelchair, over him/her.
The tour starts off in Boston, where Bam manages a last-minute win thanks to one of Paulie's stunts (he dumped a port-a-potty in the sea with someone inside), which surpassed the advantage Team Hawk had at the time. As a result, on the "Wheel of Loogies" (which is named for the fact that the wheel has to be spat upon) it was determined that one of Hawk's teammates should be eliminated ("Cut One Loose"), and this fate fell over Bob Burnquist (via having a tennis ball shot at his genitals). Later on, in Barcelona, Tony's team takes the lead again; however, the punishment for Team Bam was to have the rookies of each team swapped ("Rookie Swap"), in his case, the player and Eric Sparrow, which moves from Team Bam to Team Hawk, much to Bam's relief, and Tony's annoyance. At that time though, word had spread out about the World Destruction Tour, which was supposed to be a low-profile event but now is appearing on TV news.
The next leg of the Tour is the German capital, Berlin, where Sparrow and the player are swapped back (because "Rookie Swap" was hit again). At that moment, an underground film "writer, producer, director" by the name of Nigel Beaverhausen wishes to bring the tour to the public but instead winds up being humiliated by Tony and Bam. After causing chaos in Bangkok (the skaters were en route to Australia, but Chad Muska suggested a stop in Thailand), the Tour lands in Sydney, Australia (actually, Bam's team arrives later due to departure problems that make them wind up in India). At the end of the leg, the player is supposed to be eliminated by being stripped down to underwear and hit by mousetraps launched at him/her, but due to Rodney Mullen spotting a mathematical error in the teams points, the player has to compete with Eric - the loser will be eliminated from the tour. The group ponders what to do when an Australian skater kid shows them a video of the tour, created by Nigel Beaverhausen. Bam then decides that whoever humiliates Beaverhausen more will stay on the tour. Eric only manages to steal his clothes but the player, with Nigel's clothes (Bam's idea, as he too did not want Eric around anymore), goes off causing rampage on Australian citizens, so that Beaverhausen will be blamed for it. Also, Eric is eliminated from the tour, which advances to New Orleans.
At the end of the New Orleans leg, Nigel revealed that he filmed the whole tour, even before he met Tony and Bam in Berlin. Nigel then proposes that if he is allowed to film the whole tour, he will pay for all the damages of the tour. After Phil Margera shows Tony and Bam the long damage bill (with a high final money sum of over $21,000,000), they accept. Team Hawk then performs a death-defying stunt called the "Equalizer" to tie up with Team Bam and is successful, but team members Mike Vallely, Chad Muska and Rodney Mullen are arrested by the cops for stealing the helicopter used for the stunt, leaving only the player and Tony Hawk for the final leg of the Tour: Skatopia, in the backwoods of Ohio, defined by Tony as "the skateboarding Mecca". Though Team Hawk, reduced to two members, performs well enough to win, Bam decides to blow up Skatopia, confident on his victory. In order to save people from the imminent damage, Tony quickly evacuates the skaters and, so thereafter, Bam dares the player (who is still stuck in the back end of Skatopia) to exit the whole flaming park in a single combo, which he considers impossible, but is accomplished by the player, giving Team Hawk the win in the World Destruction Tour. Nigel then wants Bam to give him the tape of the tour, which only shows Bam's father, Phil Margera in the toilet, yelling for more toilet paper. The game ends with Bam and Tony humiliating Beaverhausen once more, with Bam pulling down his pants in international TV broadcast.
