A dragon has gained control over the king of Riccar, manipulating him into removing the Sword of Hope from a painting, releasing its curse. Summoning the dark power mammon the dragon turned the people of Riccar into trees. When Prince Theo is born, the king tries to murder him, but Theo is saved by the brave knight Pascal who flees with him into a forest where three magicians live who conceal the king's castle underground to prevent the evil from spreading. After living in the forest for 15 years, Prince Theo is finally strong enough to try and stop the dragon, using the Sword of Hope one of the magicians had retrieved.

Sword of Hope combines Adventure and RPG elements. The prince can select commands such as "look", "open", "magic", "use" etc. to interact with the game world, talk to NPCs or solve puzzles. When he encounters an enemy, the game switches to a turn based battle mode in which enemies have to be fought in typical console style RPG battles.