The inhabitants of Takachiho village in Tsukusu, western Jipang, are believed to be the descendants of the legendary Fire Clan, protectors of Jipang who fight evil demons. One day, a boy named Namida is washed up on their shore. Namida cannot remember anything from his past. He is rescued by a girl named Ichiyo, and the two grow up together like brother and sister. However, during a local festival, evil spirits are accidentally unleashed into the world, and chaos engulfs Tsukusu. Ichiyo is kidnapped by for mysterious reasons by demonic creatures. It's time for Namida to begin the most dangerous adventure of his life, rescue Ichiyo, and find out the truth about his origins.

Tengai Makyō III: Namida is the sixth Tengai Makyō role-playing game, and the third in the main series (following Manjimaru). Like most of its predecessors, it is set in Jipang, a fantasy land that reminds medieval Japan. The game features similar setting, humor, and gameplay system to other installments of the series. It utilizes a standard Japanese role-playing system with turn-based battles, weapon and accessory equipment, physical attacks and special techs, magic, etc. The enemies are random and often appear in very large groups, but the player can also target a whole group of enemies even with physical attacks.

As with previous games, players receive magical spells from "Tengu's Retreats" (little houses scattered across the country) and exchange them freely between party members. Active party contains up to three combatants; however, a larger number of characters join Namida on his quest, and they can be substituted by the player for the most part. In this game there is a wider variety of special techs, and it is possible to use them repeatedly in battles in order to master them and discover new ones.