While the previous Phantasy Star spin-offs were adventure games with some RPG characteristics, Gaiden is a full-fledged RPG.

Taking place on a planet named Copto, one light-year away from the Algo star system, it tells the story of two youths, Alec and Mina, who set out to rescue Alec’s father from a group of bandits known as the Daedelus. Copto is home to the Alisaland colony, named after Phantasy Star‘s heroine, Alis Landale (Alisa in Japan), who discovered it sometimes after the first game. There, according to this game, she fought the demon Cablon, and predictably sealed him away rather than destroying him; as the game begins, he is, of course, about to be resurrected after 400 years of slumber.