Kaiserreich: Legacy of the Weltkrieg is set in an alternate timeline where the Central Powers win World War I.

The Kaiserreich timeline departs from that of the real world during The First Weltkrieg, when the German Empire ends their unrestricted submarine warfare after their sinking of RMS Lusitania, preventing the United States from joining the Entente. In 1918, the Kaiserliche Marine defeats the Royal Navy at the Second Battle of Jutland, ending the British naval blockade. With renewed strength, the Kaiserreich launches a great offensive in Spring 1919, pushing the frontline to Paris. With their army defeated and morale destroyed, a socialist revolution founded on the ideology of Syndicalism overthrows the Third French Republic, exiling the government to North Africa and creating the Commune of France.

On the Eastern Front, the Russian Civil War is in full force, but the Reds are losing. The White Russian forces, supported by German intervention, had regrouped and fought back, defeating the Reds. On the Alpine Front to the South, the Austro-Hungarian Empire defeats the Kingdom of Italy, and the resulting Italian Civil War divides Italy into multiple hostile states.

As the war ends on continental Europe, the United Kingdom cannot afford to continue the war. A ceasefire is declared in 1919, followed by a Peace with Honor peace treaty in 1921. In 1925, a Syndicalist revolution overthrows the British government. The Royal Family is exiled to Canada, the British Empire is effectively dissolved, and the Syndicalist Union of Britain is declared as the new sovereign nation of the British Isles.

Meanwhile, having remained committed to neutrality, the United States does not intervene in the war. While having benefited greatly from supplying the Allied powers, the defeat of Britain and France along with Germany's stranglehold on global trade prevents the US from being able to recover its investments in Europe, inflicting massive economic damage on the republic. With the economy in chaos, the formerly entrenched Republican and Democratic parties begin to see their influence wane as more extreme Syndicalist, Populist, and technocratic political parties rise to power. This sharply divides the American populace, and there are whispers of armed paramilitaries making preparations for a Second American Civil War.

It is now 1936. Germany has been the dominant superpower of the world for over a decade, their influence stretches across Europe, Africa, and Asia. But the global balance is shaking in this turbulent year. The Berlin stock market collapses on Black Monday and unleashes a global economic crash. Countries the world over are flocking to forge global alliances — with the German Reichspakt, the remnants of the Entente, the Syndicalist International, the Japanese Co-Prosperity Sphere, and others. All are preparing for a new global conflict. Dormant societal and political problems are being aggravated by the collapse, escalating beyond control. A Second Weltkrieg, promising to be several times bigger than the first, seems to lie on the horizon.