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The story begins with Max Payne returning home to find several drug junkies high on a new drug called Valkyr. He also finds that the junkies, who promptly attack him and are quickly dispatched, have killed his wife and newborn daughter. After his wife's funeral, he transfers to the DEA.

Three years later, he is an undercover operative investigating the Punchinello Mafia family, who is responsible for the trafficking of Valkyr. B.B. Hensley, a colleague in the DEA, gives Max a message asking him to meet Alex Balder, another DEA agent and a good friend of Max's, in the subway. When Max arrives at the subway, Alex is shot by an unknown assassin. As a result, the police consider Max the prime suspect in Alex’s death. Additionally, the Punchinello family finds out that he is a cop and wants him dead.

Max seeks Jack Lupino, who oversees Valkyr distribution for the Punchinello family. After killing him, he meets Mona Sax, who laces his drink with a sedative and leaves him to be found by the Mafia, who proceed to interrogate him.

Max escapes the Mafia and gains access to a shipment of guns belonging to the Russian mob after killing one of their traitors. Max uses these weapons to infiltrate the house of Don Punchinello, the head of the Mafia. Max discovers that the Don is only a puppet in the Valkyr market when the Don is killed by agents of Nicole Horne, CEO of Aesir Corp, in front of Max. Horne herself then injects Max with an overdose of Valkyr and leaves him for dead.

When he awakens, he pursues his only lead, Horne's last words, “Take me to Cold Steel”, heard just before he passed out. It leads him to a foundry with an old military bunker under it. He discovers that Valkyr was the result of a military project to improve its soldiers’ stamina and morale; the project was halted shortly after it began due to lackluster results. He also discovers that his wife accidentally found out about the project while working at the District Attorney’s office, so Horne let Valkyr junkies loose in Max's house.

After leaving the bunker, Max gets a call from B.B., who asks Max to meet with him at a garage lot. There, Max realizes that B.B. was the one who shot Alex, framing Max for his murder. A huge running gun-fight begins with Max giving chase through the garage lot. After killing B.B., Max gets a phone call from a man named Alfred Woden asking him to come to the Asgard building. Alfred is part of a secret society called the "Inner Circle". Woden informs Max about who Nicole Horne is and says the Inner Circle cannot pursue Horne because "their hands are tied." They ask Max to kill Horne in exchange for ensuring that any criminal charges against him are dropped. After the meeting, the room is stormed by Horne's agents. They kill every person in the room except for Max, who manages to escape, and Woden, who pretends to be shot.

Max enters the Aesir Corp. main office, where Horne is located. As he makes his way past security guards and mercenaries, he runs into Mona Sax again. She is shot by mercenaries after refusing to shoot Max. Max confronts Nicole and states that this whole thing started after Max's wife found out about the Valkyr project. Horne runs to the roof of the building, boarding a helicopter. Racing up to the roof, Max shoots the guy wires of the building's antenna; the Antenna snaps off the roof and comes crashing down on the helicopter.

The NYPD arrive at the scene, arresting Max. As Max is being led out of the building by the SWAT team, he sees Alfred Woden. Knowing that Woden will ensure his safe passage through the judicial system, Max smiles genuinely.