City of Fear

City of Fear is the name for the main story of Batman: Arkham Knight, also treated in-game as the primary Most Wanted mission. Scarecrow serves as the main villain, with the Arkham Knight as the secondary villain.

Story
After two years to plan his revenge, Scarecrow is convinced by the mysterious Arkham Knight to unite the Gotham underworld into an army to take down Batman. Scarecrow uses five ounces of his latest toxin to make everyone at Pauli's Diner kill each other as a demonstration of how lethal it is. With all the normal citizens scared out of the city, the militia take control of Ace Chemicals to mass produce the new toxin. However, Batman manages to stop the exploding factory from releasing a huge wave of toxin. The Knight kidnaps Oracle and Scarecrow tricks Batman into thinking she committed suicide after being gassed with fear toxin. Batman recruits Poison Ivy to neutralize the toxin, by resurrecting old plants with pollen capable of it.

Making matters worse is Batman was affected by the gas during the ACE Chemicals incident, and is now seeing hallucinations of the Joker taunting him about the infection in the blood he gave him. Harley Quinn attacks Panessa Studios to free four other people infected with the Joker's blood that have been driven insane by it. However, one of the infected kills the other three and himself, leaving Batman the only one. Fearing Robin might be kidnapped by Scarecrow, Batman locks him up. Eventually, Scarecrow sends the Arkham Knight to activate the Cloudburst to spread the fear gas. Batman helps destroy the tank holding the device, and the Knight flees. Ivy dies from giving her all to clear the toxin.

Batman tracks a SWAT message to Gordon, who was looking for Oracle. This leads Batman into another confrontation with the Arkham Knight, who reveals himself as Jason Todd. Once Batman offers to heal the trauma Joker inflicted on him, Jason flees. Scarecrow takes Gordon hostage, while Batman saves Oracle. Scarecrow sends the militia to keep GCPD busy to buy to time break into the studios for the Joker infected; however, he takes Robin hostage instead, gaining twice the leverage over Batman.

Forced to surrender, Batman is taken to Arkham, where Scarecrow unmasks him on television. Injected with fear toxin, Batman manages to confront the manifestation of the Joker infection in his mind and finally put fear into his old nemesis, locking him away in a dark corner of his mind. Freed by Red Hood, Batman forces Scarecrow to take his own medicine, breaking his mind. Taking him back to GCPD, Batman calls Alfred, telling him to prepare the Knightfall Protocol once he's done catching the remaining super villains left on the loose in Gotham.

Trivia

 * Oddly, Scarecrow's plan to cover Gotham in his fear gas with the Arkham Knight's help is similar to the plot of Batman Begins.
 * Scarecrow is allied with someone who knows Batman's secrets and has an army. (In the film, it's Ra's al Ghul and the League of Assassins.)
 * When the plan is enacted, the fear gas only affects a portion of Gotham. (In-game, it only covers three islands of Gotham. In the film, the dispersal method was following a monorail track before being stopped.)
 * One difference is that, unlike the Scarecrow of this universe, the one from Batman Begins was merely a pawn. While Arkhamverse Scarecrow wanted nothing more than to spread fear and chaos with the toxin, the other version believed Gotham would be held ransom by with the threat of the toxin.
 * The title is referenced by Scarecrow when the Cloudburst is activated and Fear Toxin starts to engulf the entire city: "Welcome to Gotham... City of Fear."
 * After completing the Most Wanted mission, Joker's hallucinatory presence stops appearing in other Most Wanted missions and free roam, and thugs and other NPCs now comment on Batman's identity reveal.
 * Ivy's second plant does not suck up Fear Toxin when the cloudburst goes off. In fact, it isn't even affected by the poisoning the one in the Botanical Gardens suffers.
 * The password to enter Scarecrow's barge in Arkham City was also "City of Fear".
 * When the fear gas covers the city, it only covers the playable area, instead of the whole city. It is possible that Scarecrow simply overestimated the Cloudburst's power or that it wasn't fully charged.
 * The player can still enter Wayne Tower (if Friend in Need is completed) and visit Iron Heights Penitentiary and Mr. Freeze's ship (as they are out of the affected area). If the player goes to these locations, the sky will revert to blue; it will return to orange if they return to the regular areas.
 * If the player completes all of Gotham's Most Wanted before surrendering to Scarecrow, Joker hallucination's dialogue in Scarecrow's warehouse changes slightly.
 * If they are not completed, Joker will complain on how Bruce should go back, as "there's still much more fun to be had out there".
 * If all are completed, he will note that there are "no more fingers to break or heads to crush". He'll also state that he always knew that he would be there when the Batman finally dies, even if only in his head.