The Loptr Empire dominates the continent of Jugdral in the name of their dark god, Loptous. After a long and far-reaching reign of tyranny, however, the empire is finally toppled by the emperor's own brother, Maera, and 12 crusaders who then divide the land into nations that their descendants come to rule.​​​
Peace reigns on Jugdral until the year 757 of the Grann Calendar, when the kingdom of Verdane suddenly invades its neighbor Grannvale, seizing upon a momentary weakness while Grannvale's military is distracted in the eastern kingdom of Isaach. 
The castle in Yngvi is overrun by Verdane soldiers, and Edain, a noblewoman of House Yngvi, is captured. House Chalphy, allies of House Yngvi and descendants of the crusader Baldr, are well positioned to rescue her—but with Lord Byron absent, that duty falls to Byron's son, Sigurd.
As Sigurd gathers an army and marches to rescue his childhood friend, he is unwittingly drawn into a conflict that will span a generation and shake Jugdral to its very foundations.

This game features many mechanics that have gone on to influence subsequent entries in the series. Among these is a system by which units can form relationships, get married, and bear children with traits determined by their parents. Other firsts for the series are the classic triangle that governs weapon advantages, skills that make each unit unique, and the ability for cavalry units to move twice.