Grand Theft Auto: The Ballad of Gay Tony is the second of the two episodic expansion packs available for the PlayStation 3, Microsoft Windows and Xbox 360 versions of Grand Theft Auto IV, developed by Rockstar North and released for the Xbox 360 on 29 October 2009. It was then released for the PlayStation 3 and Microsoft Windows on 13 April 2010. It is the fourth expansion pack in the Grand Theft Auto series, the 14th release on the series and is the penultimate game of the Grand Theft Auto IV era (Chinatown Wars being last, preceding Grand Theft Auto V). The Ballad of Gay Tony follows the exploits of protagonist Luis Fernando Lopez, an ex-member of the Dominican drug dealers and the personal bodyguard (referred to by himself as "business associate") of Anthony "Gay Tony" Prince. Prince is the owner of the two largest nightclubs in Liberty City and is a high-status socialite.
Rockstar Games said in their press release that this episode "injects Liberty City with an overdose of guns, glitz, and crime" and that "players will struggle with the competing loyalties of family and friends, and with the uncertainty about who is real and who is fake in a world in which everyone has a price." A combined standalone disc-based package titled Grand Theft Auto: Episodes From Liberty City, which does not require the original Grand Theft Auto IV game to be played, was released alongside the second expansion and contains both The Lost and Damned and The Ballad of Gay Tony.
The Ballad of Gay Tony includes the ability to replay previously passed missions with scoring. This feature was previously introduced to the series in Grand Theft Auto: Chinatown Wars. Additions to the game's inventory include new weapons such as the FN P90, the M249 SAW light machine gun, the Atchisson Assault Shotgun, the .44 Auto Mag pistol, and the sniper rifle DSR-1. It also includes the return of satchel charges. Additional vehicles include new luxury high-end cars and motorcycles, a new aircraft, a small attack helicopter called the "Buzzard", a heavy-lift helicopter called the "Skylift", and a shuttle helicopter named the "Swift". In addition, the parachute returns, allowing players to participate in BASE jumping and skydiving challenges. When flying a helicopter the map now functions as an altimeter.
The game also introduces a new driving range activity, as well as the ability to visit Tony's two nightclubs, where they can participate in drinking and dancing-based minigames. They can also manage the club's security. Players may also enter an underground fighting tournament; where they can either spectate or compete in fights. In multiplayer, free mode, deathmatch, team deathmatch, race and GTA Race modes were updated, and a "BASE jumping" (multiplayer competition) mode was introduced, as a variation of free mode.
After witnessing the heist of the Bank of Liberty (carried out by Niko Bellic and Packie McReary), Luis Fernando Lopez enters the loft of his employer, owner of successful clubs Maisonette 9 and Hercules "Gay" Tony Prince. Tony is in serious financial trouble, having taken out massive loans from the Ancelotti crime family and Mori Kibbutz in order to keep his clubs running. He asks Luis to work for Mori (later revealed to be Brucie Kibbutz's older brother) and Rocco Pelosi, an Ancelotti gangster, in order to satisfy his debts. Luis soon becomes acquainted with Yusuf Amir, an Emirati real estate developer who is interested in purchasing and franchising one of Tony's clubs, and Ray Bulgarin, a Russian crime lord he met in the club. Tony also plans to buy two million dollars worth of diamonds in order to sell them at a higher price, but members of The Lost Motorcycle Club, led by Johnny Klebitz, intervene the trading and steal them, resulting in the death of Tony's boyfriend Evan Moss. Luis manages to intercept a meeting to trade the diamonds and recovers them. Bulgarin soon reveals that the diamonds are his property, and believes that Luis and Tony colluded to steal them, marking them for death. Giovanni Ancelotti orders that the diamonds are to be used as a ransom payment for his daughter Gracie, who was kidnapped by Niko Bellic and Patrick McReary.
Rocco meets with Luis, and suggest that he should kill Tony in order to gain favour with Bulgarin, so that he will spare him. Though he contemplates doing so, Luis ultimately refuses and escapes Tony's club when Russian gangsters sent by Bulgarin assault it. Luis travels to Firefly Island to disrupt Bulgarin's drug operations and cut off his main cash flow, and learns that Bulgarin is fleeing the city by plane within two hours. With the help of Yusuf (who kills Bulgarin's henchmen attacking Luis) with his Buzzard attack chopper, Luis manages to board the plane, and kills all of the henchmen on board. A vengeful Bulgarin emerges from the cockpit holding a grenade, threatening destruction to both of them if Luis kills him. Luis takes the risk and shoots Bulgarin. A dying Bulgarin drops the grenade causing the front of the plane to explode. Luis parachutes out of the burning wreckage of the plane to safety, and heads to Meadows Park where Tony is waiting . Once there, they both decline Yusuf's intention to franchise the clubs, as they prefer to keep it a "family business".
In a small twist ending, the diamonds continually fought for are found by a homeless man in the trash.
Like The Lost and Damned, this story also intertwines with the main story of Grand Theft Auto IV. The first main part of the storyline that intertwines is the diamond deal. A cook aboard the ship Platypus finds the diamonds (as seen in the opening credits of Grand Theft Auto IV, and the deal between Tony and the cook is disrupted by the Lost motorcycle club, also shown in the Lost and Damned. The second deal at the Libertonian with Isaac is also shown in both DLCs, as well as Grand Theft Auto IV. The trading of the diamonds in exchange for Gracie also is in both Grand Theft Auto IV and the game, as well as the aftermath of the diamonds, which had fallen into a dump truck, seemingly finding their way into a trash can, later found by the homeless man. Yusef Amir is mentioned briefly by Playboy X in Grand Theft Auto IV during the mission in which Niko and he attempt to take back one of his construction sites. Gay Tony is also briefly mentioned by "French" Tom Rivas, who talks about his bankruptcy. The big heist of the Bank of Liberty also features both Niko and Luis.