The evil Kan is spreading his power over the land of Norem, using his minions called Skull. As a brave warrior, you are asked by an old magician to help him rid the land of Kan and the Skull.

The basic gameplay of Xyphoes Fantasy is similar to that of Shadow of the Beast or parts of Psychic World, where you walk along a monster-infested landscape and the main task is to get as far to the right as you can without losing your life. Apart from walking, ducking and jumping, your warrior can send energy waves at monsters. Potions and magic crystals upgrade your weapon or give you a protective shield. For each level, the magician demands that you find a number of magic items which will restore his power. After having cleared the platform levels, you must face one of Kan's swordsmen and defeat him, Barbarian-style. In level two, you are given a horse to ride through the landscape, similar to Shinobi III.