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The story of this game is loosely based on the 19th century Japanese epic novel Nanso Satomi Hakkenden ("Tale of Eight Dogs") by Kyokutei Bakin. In the game, the player controls a young warrior named Shin. The elder of his home village tells him that a magical artifact known as the Statue of the Four Gods has been stolen. This artifact was sealing away the spirit of the evil Tamazusa. To prevent Tamazusa's resurrection, Shin must find seven other warriors. Only when they are united can the evil be defeated once and for all...

Despite the premise of eight warriors, Makai Hakkenden Shada is an action RPG in which the player controls only Shin. The game is similar to the better-known Ys games in many ways. As in Ys, the hero fights enemies simply by "bumping" into them. Defeated enemies produce money, which can be spent in villages to purchase weapons and various types of armor, and experience points. Once a set amount of those is accumulated, the hero gains a level.

Later in the game Shin receives spells and special techniques, which must be executed actively, by pressing a button. There is also a "search" command in the game, which is required to use to solve certain situations.