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In Rune Factory 3 the player, Micah by default, is an amnesiac who wanders into the town of Sharance and is discovered by a girl named Shara. Micah is a half human, half monster who can shift between human and wooly forms.

Like in the other Rune Factory games, the gameplay is a mix of the farming found in the Harvest Moon series and battling. The player must grow and maintain crops and build up their home, and there are also dungeons to battle and befriend monsters in. The stamina of your character still depends on the meter of rune points, and once it is depleted it will start draining the meter of health points.

New features this time around include dynamic schedules for NPCs, the ability for NPC villagers to accompany players into dungeons and multiplayer with the ability to play dungeons with up to two other players.