ThePsiCorpsandPresidentClark,whosegovernmenthasdiscoveredShadowvesselsburiedinEarth'ssolarsystem,begintoharnessthevessels'advancedtechnology.TheClarkadministrationcontinuestobecomeincreasinglyxenophobicandtotalitarian,andusesamilitaryincidentasanexcusetodeclaremartiallaw.ThistriggersawarofindependenceonMars,whichhadlonghadastrainedpoliticalrelationshipwithEarth.Babylon5alsodeclaresindependencefromEarth,alongwithseveralotheroutlyingEarthAlliancecolonies.Inresponse,theEarthAllianceattemptstoretakeBabylon5byforce,butwiththeaidoftheMinbari,whohavealliedwiththestationagainstthegrowingShadowthreat,theattackisrepelled.
BecomingconcernedovertheShadows'growinginfluenceamongsthispeople,CentauriambassadorLondoMollariattemptstosevertieswiththem.Mr.Morden,theShadows'humanrepresentative,trickshimintorestoringthepartnershipbyengineeringthemurderofMollari'smistresswhileputtingtheblameonarivalCentauriHouse.OpenwarfarebreaksoutbetweentheShadowsandtheallianceledbyBabylon5andtheMinbari.ItislearnedthatgeneticmanipulationbytheVorlonsisthesourceofhumantelepathy,asitislaterdiscoveredthatShadowshipsarevulnerabletotelepathicattacks.DispleasedattheVorlons'lackofdirectactionagainsttheShadows,CaptainJohnSheridanbrowbeatsVorlonambassadorKoshNaranekintolaunchinganattackagainsttheirmutualenemy.Kosh'sdeedsleadtohissubsequentassassinationbytheShadows.
FormerstationcommanderJeffreySinclairreturnstoBabylon5toenlisttheaidofCaptainSheridan,Delenn,IvanovaandMarcusinstealingtheBabylon4spacestationandsendingit1,000yearsbackintimetouseitasabaseofoperationsagainsttheShadowsinthepreviousMinbari-Shadowwar.UndergoingthesametransformationasDelennattheendofSeason1,SinclairtransformsintoaMinbariandissubsequentlyrevealedtobetheactualValenofMinbarilegend,ratherthanareincarnation.Spurredbythereappearanceofhisassumed-deadwife(whonowworksfortheShadows),SheridantravelstoZ'ha'dum,theShadowhomeworld,inanattemptbythemtorecruithim.Howeverheinsteaddestroystheirlargestcityinakamikazenuclearattack,andislastseenjumpingintoamiles-deeppittoescapetheexplosion.Garibaldi,duringafightwithShadowvessels,goesmissing.
