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Arcadia is a world where continents float high above, and people travel by airships. Among the countries of this world, the most powerful one is the Empire of Valua. Guided by its greedy admirals, Valua strives to possess all the power in Arcadia. The boy Vyse and the girl Aika are members of the Blue Rogues - noble pirates who attack only Valuan war ships. During one of their confrontations with a battle ship, they encounter a girl named Fina, who is on an important mission whose secret she cannot tell yet. Involved in the conflict with the Empire of Valua, the trio of the heroes must explore the whole world of Arcadia in order to defeat the admirals.

Skies of Arcadia is a traditional Japanese role-playing game with turn-based combat and randomly appearing enemies. Player-controlled party contains up to four active combatants. During battles, characters attack physically, use items, or cast magic spells, which deplete magic points as well as spirit points (SP). Each character is also able to "focus", which restores spirit points. Once the common spirit bar is filled, characters can unleash powerful special attacks. Enemies may be resilient or vulnerable to particular elements; elemental affinities of weapons can be switched at any time during battles.

Beside the usual party-based combat, there are also airship battles in the game. These usually occur at specific plot points and involve the player-controlled airship fighting another ship or a giant creature. These battles are round-based, with the player planning several turns ahead, using various kinds of ship weapons (cannons, torpedoes, etc.).

Airship is available to the player since the beginning of the game and can be navigated physically; the game's "world map" consists entirely of air space, with islands that can be accessed only by airship. Most locations, however, can only be explored after having advancing the story and received an ability that would grant the player access to unexplored areas. The airship can also be customized to a degree, and crew members in various parts of the world recruited, improving its combat abilities.