The setting of Dragon S?seiki is based on true historical evidence of a pre-Inca civilization in South America, today's Bolivia, known as Tiawanako or Tiwanaku, stretching in time as far as 1500 BC. The game incorporates some historical and mythological information about the Tiawanako culture, however, most of the other elements for the setting, the characters, and the plot are pure fantasy.

The game follows the adventures of a young orphan named Guy Pendragon, who explores the Great Underground Empire of Tiawanako with his old mentor Topa. The mayor of one of the towns asks Guy to bring him some healing water from a magical fountain - which is, naturally, just the beginning of a larger story, during which Guy and his companions will uncover the secrets of the ancient civilization.