Before the Battle
Cloud Strife's party has found out from Bugenhagen that Aeris had managed to cast Holy in an attempt to stop Sephiroth's Meteor from destroying the Planet. Sephiroth is holding Holy back, and the only way save the Planet is by destroying Sephiroth himself. As the party is leaving the Forgotten Capital, they pick up a strange signal and discover Diamond Weapon attacking Midgar. They fly the Highwind to Midgar to confront Diamond Weapon and protect the city.
Both the Highwind and the Diamond Weapon arrive at the outskirts of Midgar around the same time. Cloud chooses two allies from AVALANCHE to help him fend off the Weapon. After giving the Weapon minor damage, Reeve Tuesti, the Head of Urban Development in Shinra (acting through Cait Sith) orders the party to get away, for the Sister Ray is being launched. Diamond Weapon fires at the city before Sister Ray's energy blast destroys it, along with the energy barrier around the crater. Even after having been destroyed the Weapon's beams of energy hit the Shinra Headquarters and leave President Rufus Shinra injured and thought dead by both AVALANCHE and Rufus's minions alike.
The party flies to the Northern Crater with intention of defeating Sephiroth, only to find that Scarlet and Heidegger are ordering Reeve to turn off the Mako Reactors, but Reeve is not able to. They discover it Hojo's doing, and if they don't stop him the reactors will explode, destroying Midgar. Reeve is caught and arrested for his double-agent role. The party parachute to Midgar and can confront the Turks, and defeat Scarlet and Heidegger piloting the Proud Clod. They part ways with the Turks, but destroy the Proud Clod, killing Scarlet and Heidegger. Once they reach Hojo, he reveals himself as Sephiroth's father and that he is going to fire Sister Ray again to give his son a burst of energy to help him out. The party kills Hojo and his samples, but because he experimented with his Mako Juice on himself, he is reborn as the monster Helletic Hojo and then the monster Lifeform-Hojo N. They then deactivate the Mako Reactors before it is too late. Before his demise, Hojo was able to upload his consciousness onto the Worldwide Network as revealed in the sequel Dirge of Cerberus -Final Fantasy VII-.
With the death of Hojo, the destruction of Shinra, and the elimination of Sephiroth's enemy barrier, the battle proves to be a decisive victory over both of AVALANCHE's enemies. Unfortunately, there is only a week before Meteorfall, so the party is forced to hurry into the Northern Crater to confront Sephiroth and Jenova to release Holy to combat Meteor.