UFO: Afterlight takes us to Mars, where a human colony has been built with the help of the Reticulans not long before the events of UFO: Aftershock took place. Mars base is self-sustainable and provides all the necessities for survival of humans on a foreign planet, mainly breathable air, water and food. Although the people inhabiting this colony have the technologies and knowledge required for their further development, basic survival is their major concern. Their only activity is the research of a nearby excavation site, which proves the existence of an ancient intelligent and highly developed alien civilization.

The player will enter the game when the research drastically affects all Mars inhabitants. New and unexpected enemies appear in the form of robots, built centuries ago by the unknown aliens for their protection, whose purpose is to eliminate any traces of other civilizations on Mars.

Humans on Mars now have a good reason for their own development, even though not knowing yet that the planetary self-defense mechanism might not be the worst awaiting them, and that their unintentional opening of hyperspace gates will bring an even bigger enemy right to their door. After all attempts to contact the Earth Laputa fail, the colonists are left with no other choice than to fight the enemies with their own means, or be annihilated.