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Privateer is set in the Gemini Sector at around year 2669, when the human Terran Confederation is engaged in war with the Kilrathi as told in other games of the series. While the Confederation has established itself in this sector, pirates, Kilrathi, and Retros - members of a hostile religious fanatic group named "The Church of Man" - also roam the sector. Among civilians who travel around the area are merchants and mercenaries, also known as bounty hunters.

One such mercenary is Burrows, whose father recently died and whose girlfriend and merchant employer had recently been killed. Seeking new adventure, Burrows lands on the industrial planet of New Detroit and meets a man named Sandoval, who employs Burrows and gives him a mysterious artifact. After completing a delivery for Sandoval, Burrows returns only to find that Sandoval is dead. He meets Tayla, a pirate, who agrees to offer information about the artifact and money in exchange for Burrows's service. Burrows agrees and makes his way to Oakham pirate base, where he embarks on a series of smuggling missions. However, after completing the missions, Tayla says that she has no information and redirects Burrows to Roman Lynch, a crime boss based in New Constantinople, the seat of government of the Gemini sector.

Burrows makes his way to Lynch (and his favorite enforcer, Miggs, who speaks in a manner reminiscent of Maxie rosenbloom, who says that his contacts can help Burrows uncover facts about the artifact, in exchange for service. Burrows agrees and gives Lynch a hologram of the artifact. After flying several missions that get himself into even more trouble with the authorities, Burrows is told that one of Lynch's contacts has found information located at Oxford's library and tells Burrows to retrieve the contact. However, on the way, Burrows is ambushed by Lynch's men. He defeats them and decides to visit Oxford on his own.

Burrows arrives at Oxford, the sector's primary university named after the old Oxford of Earth. He visits the library there, but is denied access since he is not a student. He then meets Masterson, in charge of the library, who offers Burrows access provided that he flies missions for Oxford, whose surrounding area has been under the attack of Retros. After defeating the Retros and escorting Oxford's book transport ships to safety, Burrows receives access to the library. In the library, Burrows finds that the computers are unable to completely analyze the artifact. However, the computer gives him an article about Dr. Monkhouse, the leading scholar in Xenoarchaeology who has spent considerable time researching the "Steltek Hypothesis." Burrows reads that Monkhouse is currently conducting his research on the agricultural planet of Palan.

He makes his way to Palan, where he meets Dr. Monkhouse. However, Monkhouse refuses to talk until he leaves the planet, which has been blockaded by a faction of mercenaries. He refuses to leave on Burrow's ship, but instead tells Burrows to visit the asteroid base on Barsa, where the resistance is being organized. On Barsa, Burrows meets Lynn Murphy, who explains that the Bronte Corporation has hired mercenaries to blockade Palan in order to damage the operations of the rival Rondell Corporation. Murphy, who organizes the resistance for the Rondell Corporation, hires Burrows to help lift the blockade. Burrows then proceeds to destroy a whole fleet of mercenaries to successfully lift the blockade. He then returns to Palan and takes Dr. Monkhouse off planet. They are pursued by a group of Kilrathi who demand that Burrows hand over Monkhouse. Burrows defeats them and lands on Barsa.

Monkhouse explains that the artifact belongs to ancient alien race known as the Steltek, who once ruled a galaxy-spanning empire millennia ago, whose technology then was even more advanced than present technology. However, weary of power, the Steltek retreated to the center of the galaxy for a tranquil life. Monkhouse then shows Burrows his piece of the artifact, which together with Burrows' piece forms a map. As Burrows is uninterested in scientific discovery, he makes a deal with Monkhouse. In exchange for full rights to any treasure found, Monkhouse will get sole credit for any scientific discoveries that may result. Monkhouse then programs the map into Burrows' ship and Burrows heads off to Rygannon's mining base, a station for the sector's Exploratory Service.

Burrows meets Taryn Cross, who offers him work in the Exploratory Service to chart unmapped regions in space. Burrows then ventures to the uncharted regions of space, where he is met by pirates and the Kilrathi. In a desolate far-out region, he discovers the derelict base noted on his artifact. He lands on the derelict base, which appears to be a ruined Steltek carrier, and finds an abandoned Steltek ship. He then takes a gun from the Steltek ship, mounts it onto his own craft, and leaves. Burrows returns to Cross, reporting success from the mission, and takes off.

Burrows discovers that after leaving the derelict, a drone that has been following him around has caught up with him. He inadvertently activated the drone in a dogfight when a missile missed its intended taget and hit the drone. He lands on a base and finds Captain Sandra Goodin. Goodin tells Burrows that disaster has been following his trail wherever he goes and that Admirel Terrell wants to see him immediately. Burrows then visits Terrell on Perry Naval Base, sector's primary military installation. Terrell tells Burrows that the correlation between destructions and the path Burrows travels approaches nearly unity. He then enlists Burrows' help in destroying the "secret weapon" that has been wrecking havoc on the Confederation's ships. The plan is to have Burrows lure the target to a point where it can be ambushed by the Confederation.

On the way to the ambush point, Burrows meets a Steltek scout, who tells Burrows that the Steltek seeks to eliminate all traces of their previous technology and that the Drone will follow and destroy whoever activates the technology. The Steltek asks Burrows where he found the weapon, but Burrows would not tell. Finally, the scout agrees to energize the weapon for Burrows to destroy the drone in exchange for the location. The scout upgrades Burrow's gun and sends him off to the ambush point. There, the Confederation's forces are ready for the ambush. While normal weapons have no effect on the drone, Burrows was able destroy it using the upgraded Steltek gun.

Burrows returns to Perry where he is thanked by the Admiral. Burrows is offered to join the Confederation's forces, but declines. Regardless, Admiral Terrell awards him with the Confederation's Medal of Freedom.

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