The Mad Overlord Trebor was once only power-mad, but went off the deep end after he acquired a magical amulet of immense power, only to have it stolen from him by his nemesis, the evil archmage Werdna. Werdna, not quite sure how to use the amulet properly, accidentally causes an earthquake which creates a ten-level dungeon beneath Trebor's castle. To avoid looking silly, Werdna declares the dungeon to be the new lair for him and his monster hordes. Trebor, not to be outdone, declares the labyrinth his new Proving Grounds where adventurers must prove themselves for membership in his elite honor guard, and incidentally retrieve his amulet in the process.

The first Wizardry was one of the original dungeon-crawling role-playing games, and stands along with Ultima and Might & Magic as one of the defining staples of the genre.

The player generates and control a party of up to six different adventurers, choosing from four races (humans, elves, dwarves, gnomes and hobbits), three alignments (good, neutral and evil), and four basic classes (fighter, priest, mage and thief). These can later evolve into elite classes (bishop: priest with mage spells, samurai: fighter with mage spells, lord: fighter with priest spells, and ninja: fighter with thief abilities) if they meet the necessary level requirements. After outfitting the party with basic weapons and armor, the player sends it into a 3D vector maze-like dungeon to fight monsters in turn-based combat and find treasure.