You start the game with an introduction of the events of Baldur's Gate 1, most importantly introducing you as a Bhaalspawn. It seems you have been captured and are being tortured by an unknown villain. Your captor, a mage, speaks of power before he is drawn away by an attack. With the assistance of your allies, you escape his dungeon, making your way to the streets of the city of Athkatla. Your friend/"sister", Imoen joins in an attack on your captor by the mysterious Cowled Wizards, who police the use of magic within the city. As a result, they are both taken prisoner and whisked away.
I know dungeons are meant to be creepy, but this takes it to the next level...
Thus begins your search for the means to follow Imoen and this mage, who goes by the name Jon Irenicus. As you gather money to pay for the services of some expensive friends, you are taunted in your dreams by him. Irenicus speaks of power, of your heritage as a Bhaalspawn and the power it brings. You end up siding or opposing a group of vampires led by "Bodhi", a sinister female vampire that seems a little too familiar with you. You make your way to the island of Brynnlaw and the Spellhold Asylum where Imoen and Irenicus are being held captive. However, before you even arrive, it is relayed to you that Irenicus has taken control of the asylum, and so you are merely walking into his trap.
Spellhold before it became Spellhold
He imprisons you with the help of a traitor he placed in your midst within the dungeon in which you escaped at the very start of the game. Using his powers, Irenicus drains you of your godly essence, stripping Bhaal's spark from your body. It is revealed that the same has been done to Imoen, who (unbeknownst to either of you) is also a child of Bhaal. He has absorbed your essence, and Imoen's has been taken by the vampire Bodhi, who is now shown to be Irenicus' sister. Subsequently imprisoned again, you escape despite Bodhi's attempts to hinder you.
During this process, you become overwhelmed by the taint of Bhaal's presence (I'm not exactly sure how), and you transform into "The Slayer", which was the fearsome Avatar of Bhaal when he walked the land as a mortal. Bodhi flees at the sight of this startling development. It seems even though having the taint stripped from you has not killed you, you will die before too long if you do not get it back. The stakes for catching and defeating Irenicus just became even higher.
You attempt to follow Irenicus and Bodhi but fail as your ship is destroyed as you are yanked beneath the sea. You fight your way through the underdark and a drow city to find a group of elves who mention "The Exile", who is none other than Irenicus himself! In order to save Imoen's life, you must kill Bodhi and take back her spirit, and then you must find and kill Irenicus to save yourself. However, Irenicus is assaulting the elven city of Suldanesselar to take the power of the "Tree of Life" in order to become immortal. This is in fact the second time he has attempted to do this - the first time he and his sister conspired to do so, they were stripped of their elvish heritage; turned into twisted shells and forced to turn to dark arts merely to survive. You finally kill Irenicus (twice!) and reclaim your soul, saving Suldanesselar in the process.
Well, looks like we're Big Damn Heroes
Phew! I know that was possibly unnecessary for many of you, but it's still nice to condense the plot (yes, that is condensed!) and remind everyone of the key points. It deserves some time, because I know there's a lot of people that have been hanging out to read this post. (That's part of why it's taken me so long to get to - I've revised this post a lot)
Simply put, Irenicus is a fantastic villain. Right from the start, you've got a reason to hate him. He's captured you, tortured you, and stolen your childhood friend. Even if you're a selfish player, his promises of power should be enough to tempt you. His megalomanical taunts in your sleep seem to hint that you could become more than you are, but still indicate that he is (and will remain) more powerful than you unless you try and harness your divine heritage.
He comes across as a power-crazed lunatic even though he is already an incredibly powerful mage, but you always get the impression something more is going on. He's not simply crazy, he's Machiavellian in his schemes and ruthless in the pursuit of his own interests. He cares nothing for those that do not suit his purposes, and (rightfully) has a great disdain for most individuals because they are simply nowhere near strong enough to challenge him. His excellent voice work just adds even more to his character, particularly given this was a time when only small snippets of dialogue were voiced.
Irenicus plays the tortured villain
Irenicus is great because he's just so damn powerful and he's constantly hassling you, even in your dreams. He's a continual thorn in your side, even when he's not actually there. You get to know part of his character, the cold power-mad villain, but then that persona is developed further as the story really hits its strides. He has a crazy lust for power and revenge (but you don't know on whom he wants revenge or why), yet he still goes out of his way to protect his sister, who he seemingly still cares for after years of torment in their shared broken states. There is still some shred of compassion in him, but it is never entirely clear if it is real compassion. There's always the suspicion that part of it is simply faked through a process of logical reasoning and the shared benefit they gain from banding together. This extra depth of character really adds to him, and it is further developed at the tail end of the game.
It is revealed the Irenicus used to be Queen Ellesime's lover before he fell from grace, and he is genuinely indignant and tortured by having his elvish heritage stripped from him: "I do not remember love, Ellesime. For years I clung to the memory of it, then the memory of the memory, then nothing. The Seldarine took that from me too." Again, the manner in which this line is delivered is brilliant in that it harks bark to an encounter at the very start of the game that made no sense at the time. In an attempt in capture his emotion of love, Irenicus attempt to create clones of Ellesime that you found in his dungeon. The fact that his character is exposed to its almost vulnerable core by you seeing his inner sanctum at the very start of the game, only for you to finally make sense of that information right at the end is a masterstroke of antagonist development.
"You sly dog! You got me monologuing!"
Irenicus proves he is beyond redemption through his actions and continued refusal to back down from his ultimately destructive path, but he truly conveys to the player that for him there was simply no choice in the matter. His initial brutal punishment left him with no alternative but to pursue a path of revenge and to wreak destruction upon those that cursed him and his sister so horribly, to the point where you can almost feel sorry for him. You can understand his position that the elves manufactured the trouble they are in by destroying him so completely, yet you are still determined to bring him undone.
This is why Irenicus is such a fantastic computer game antagonist and part of the reason why Baldur's Gate 2 was such a great game. He is a complex character that you truly come to understand and potentially even respect as an adversary, yet you still have every reason to want to defeat him. In this case, the adage "better the villain you know" is proven accurate in a whole new way. You come to know Irenicus very well, you grow to hate him through his actions, you understand and almost pity him, but you want to kill him anyway.
Viva le grand antagonists!