Terra, Aqua, and Ventus gather at the Keyblade Graveyard, where the remains of the mysterious Keyblade War are found. Master Xehanort appears with Vanitas and reveals his plan to use the χ-blade to unlock Kingdom Hearts and unleash the forbidden secrets of the Keyblade War onto the various worlds, as well as to use Terra's body as a new vessel for his own heart so that he may survive long enough to see his plans come to fruition. An epic battle ensues, with Xehanort freezing Ven, and Vanitas knocking Aqua unconscious. In his rage, Terra unleashes the darkness in his heart, inadvertently allowing Xehanort to unlock his own heart and successfully transfer it into Terra's body, which results in the birth of a new, younger Xehanort.
However, Terra's mind continues to linger in his discarded suit of Armor, which comes to life and defeats Xehanort. Ven, meanwhile, manages to thaw himself before Vanitas can kill Aqua, and discovers his dark counterpart to be the source of all Unversed. Vanitas merges with Ven, possessing him and creating the χ-blade. Aqua awakens under Mickey's care, and the two fight the possessed Ventus while he battles Vanitas from within. Aqua shatters the χ-blade as Ven destroys Vanitas, bringing an end to the Unversed, though Ven's heart is lost in the process. The destroyed χ-blade unleashes a burst of light, which consumes everyone present and scatters them to the corridors of space, save for Terra's Lingering Will, which remains in the Keyblade Graveyard.