It all began when...
Long ago, an organism was found in the geological stratum of 2,000 years ago. The organism was named Jenova. She was alive. The scientists in Shinra believed she was an Ancient. They managed to talk to her, and she confirmed this theory. The fact that (almost) all the Ancients had died from a virus which transformed people into monsters made the scientists consider Jenova's appearance 'normal' for an Ancient. She could have been transformed but have survived.
Professor Gast was appointed head of the Jenova Project, an attempt to create people with the power of the Ancients. His assistants were Hojo and Lucrecia, two young scientists. Studies on Jenova showed how this organism tended to reunite when divided.
Here begins what you see the first time you go behind Lucrecia's Waterfall with Vincent in CD2
Vincent was a member of the Turks then. He was assigned to the protection of the three Shinra scientists at the Shinra Mansion in Nibelheim. He was in love with Lucrecia, and one day he asked her out. During the date, he handed her an engagement ring, but... she shook her head, began to cry, and ran away. Not many days after that, Vincent could see Hojo kissing Lucrecia at the gates of Nibelheim. He was burnt by pain but then, he though, "If she is happy then... I don't mind".
Gast was about to make an important experiment, probably the final experiment of the Jenova project. If this worked out, soon it would have been possible to create beings with the powers of the Ancients (or so he believed)... but he needed a pregnant woman, and her child. Hojo talked to Lucrecia about the thing... and told her they could have been the parents of the child. She was in doubt at first... but her love for Hojo made her decide to volunteer for the experiment.
Vincent discovered everything and, being against experiments on humans, confronted Hojo and Lucrecia. But he was unable to stop them. A child was born to Lucrecia, with Jenova cells implanted on him, and was named Sephiroth. And Hojo, to get his revenge over Vincent, altered him. He began transforming into a monster from time to time...
"This body is... the punishment that's been given to me... I was unable...... to stop Professor Gast and Hojo... And Lucrecia... I was unable to stop them... All that I was able to do was watch... That is my punishment..."
About Sephiroth...
Sephiroth never knew about his true parents, as he was taken away from Lucrecia right after being born. He was told his mother was a woman called Jenova, who had died giving birth to him (what he's been told about his father, we'll never know?).
Meanwhile, the last survivor of the Ancients was found: Ifalna, a beautiful woman. She was used as a specimen too, until Professor Gast, (finally) realizing it wasn't right to experiment on a human being, invited her to his town, the Icicle Village, where he had some interview with her about Jenova, the origin of the Northern Crater, legends of the Ancients, and such. He recorded some video at his home. He discovered Jenova wasn't an Ancient, but an organism landed on the Planet with a meteor 2,000 years ago, forming the Northern Crater. Jenova was the organism that had infected the Cetra with the virus...
Gast eventually fell in love with Ifalna. They had a daughter, whom Gast named Aeris. But not long after her birth, Hojo discovered their whereabouts and went to Icicle Village with a few Shinra soldiers. He had Gast killed, and took Ifalna and Aeris back to the Shinra labs in Midgar.
Years later, Ifalna managed to escape with her child but, in her state, all she could do was to entrust little Aeris to a woman in the slums, Elmyra. The Turks began to look for Aeris.
Sephiroth, thanks to the Jenova cells inside him, was growing strong, much stronger than normal boys. He felt he was different, but couldn't tell how exactly. He soon became the best among the members of SOLDIER, the élite troops of Shinra. A true hero. He took part in the war against Wutai, surely contributing to its defeat.
Sephiroth goes insane
Right after the war, Cloud joins the Shinra army. His aim is to become a member of SOLDIER to be like Sephiroth, but he never gets even a single promotion. One day, he is assigned to escort Sephiroth and Zack, another SOLDIER 1st class, to Nibelheim, to investigate the Mako reactor. Here, Sephiroth discovers about Jenova and, believing his mother was an Ancient, loses his mind and claims to be the rightful heir to the Planet. He burns Nibelheim, then goes back to the reactor where Jenova is held, attacking and killing many people.
Here, Zack tries to stop him, but is defeated. Cloud, blinded by anger for what his idol has done to his hometown, manages to throw Sephiroth down into the Mako juice... from which he will emerge at the Northern Crater, where Spirit Energy is gathered to heal the Planet's injury. From there, he's going to manipulate his clones...
While Zangan manages to escape, taking Tifa with him, Hojo gives orders to rebuild the town, and Shinra employees take the place of the inhabitants. Hojo implants Jenova cells into Zack and Cloud, then showers them with Mako energy (it's obviously the second time for Zack...): a process that should turn them into Sephiroth-clones, people physically constructed like the old SOLDIER. Hojo's aim is to confirm his theory of the Jenova Reunion: he believes that every Sephiroth-clone will eventually go to where Jenova is held. And to control the thing, he takes Jenova to the labs in Midgar, and assigns the people in Nibelheim to watch the moves of the clones.
But Zack and Cloud manage to escape. Cloud is Mako-poisoned, so Zack, who has resisted the treatment, has to take care of him. They travel to Midgar, but when they're near, Shinra soldiers find them and kill Zack. They don't kill Cloud, as Hojo ordered, to see if he'll go to the Jenova Reunion.
The game begins... Cloud believes he actually was in SOLDIER, and is now a mercenary. He joins AVALANCHE, a group of terrorists headed by Barret Wallace. AVALANCHE is trying to stop Shinra from sucking the Spirit Energy (i.e. Mako) from the Planet. Many things happen... when they eventually infiltrate the Shinra Headquarters to rescue Aeris, they find out Sephiroth is alive. Cloud doesn't remember to have thrown him into the Mako, so he thinks it's the real Sephiroth who killed President Shinra. There's something more than the search for the Promised Land... later on, Cloud tells his story as he remembers it, and why it's important to stop Sephiroth in order to save the Planet.
Cloud and the others begin to pursue Sephiroth, and eventually arrive to Nibelheim... but Cloud remembers his hometown had been burnt... he tells the inhabitants about it, but they reply these things had never happened...
Vincent's part
From here on, you can get Vincent. By hearing Cloud's version of the story, he'll realize it's time for action. He wants revenge over Hojo, too. This is what makes him join Cloud's crew.
Unlike most other characters, Vincent has no sub-quest in which you have to use him. Just the waterfall thing. But he wants revenge... so please, at least once and just to read the dialogue between him and Hojo (it's worth it!)... make sure he's in your party when you go to fight Hojo. He, and Barret, so that he can find his Ultimate Weapon (he'll never find it otherwise).
"I was wrong... the one who should have slept was... you, Hojo!"