During the late Universal Century, Neo Zeon worked on producing a new mass-produced MS, as well as experimentation for the Sazabi. One of the prototypes created was the Varguil, meant for Newtypes' use. Several units were created, but the project was later abandoned as the MS proved inferior in terms of Psycommu capabilities. One such unit was assigned to Agos Lagarto aboard the Atlante 3. During a battle with Londo Bell's Ra Zeim corps, one of the Varguil's funnel racks were thrown as a weapon, as Agos was unable to activate the funnels. During this battle half of its head unit was also destroyed. After the battle, the Psycho Gundam Mk-IV G-Doors' head, which had was recovered by Moon Moon was placed on the Varguil by the Neo Zeons, as it was the only available Psycommu MS. The G-Doors' head was later remotely activated by Jutta, causing the head to overwrite the Varguil's systems and make the Psycho Plates compatible with the Varguil. This resulted in the Psycho Plates freeing themselves from the colony walls and entering the colony, attaching themselves to the Varguil in a crescent shape. This version of the Varguil was referred to as the "Gundam Head type". The Varguil was subsequently given a new color scheme and renamed the Moon Gundam.