After the defeat of the evil wizard Mondain and his mistress Minax in the previous two Ultimas, peace has returned to the land of Sorsaria. Times passes and eventually geological disruptions and a resurgence of the monster populace occur, and it is soon learned that Mondain and Minax had conceived a child named Exodus before their death. Now that child has become an adult with the power to avenge the death of his parents. Obviously, it falls upon the hero from Earth to find and stop him.

The third title in the Ultima series was the first to feature a party of adventurers instead of a single player character. The party is created at the beginning of the game by assigning various class combinations and determining the characters' attributes. The game has larger and more detailed towns, populated by NPCs the protagonist can converse with to obtain clues. Like in earlier Ultima games, exploration is divided between top-down overworld locations and first-person 3D dungeons. This installment introduces separate combat screens where player-controlled party fights multiple monsters in a turn-based tile-based system.