Despite the events at the end of The King of Fighters '96, the 1996 tournament was a huge commercial success and sparked a world-wide fighting craze. Within a few months of the tournament ending, various large corporations had held smaller KOF tournament qualifiers and constructed special King Of Fighters stadiums around the world, building the excitement up for the 1997 tournament. News of the tournament spread through every form of media and fans and new fighters from across the globe come to watch the preliminary matches. Determined to harness the secret power of the Orochi, Geese Howard has created and entered a new '97 Special Team', which consists of Ryuji Yamazaki, Blue Mary and Billy Kane. Also, a mysterious New Faces Team, composed of three band-members (Shermie, Yashiro Nanakase and Chris) enter the tournament with the terrible intentions of raising Orochi from his slumber (It turns out that in the backstory of KOF '97, the American Sports Team (Heavy D!, Lucky Glauber, and Brian Battler) were originally invited to compete in the tournament, but like the same incident with Iori Yagami's team in 1995, they had their invitations stolen by the New Faces Team). Eventually, the Hero Team (Kyo Kusanagi, Benimaru Nikaido and Goro Daimon) wins the tournament and prepares to accept their hard-earned prize, but not before facing off against a psychotic Iori Yagami, who becomes possessed by the Orochi blood that flows through his body.