Tokyo Xanadu is a part-based action role-playing game set in a fictional Morimiya City located in the suburb of Tokyo. In 2005, an earthquake devastated Tokyo claiming thousands of lives. 10 years into the future, the area has been reconstructed and enhanced to endure high magnitude earthquakes, and people have all but forgotten about the day that devastated the city, going about their daily life. One such person is Kou Tokisaka, a second-year high-school student, and the story protagonist, who has been drawn to the labyrinth world of Xanadu.
The adventure part of the story occurs in the city, while the dungeon crawling RPG element takes place in Xanadu where the party progresses one level at a time, battling various monsters along the way. The player can select the party members when embarking on a journey to Xanadu, and party members can be switched at any time during gameplay, giving the player different ways to attack and dispose of creatures. All the monsters are visible on the map, and battles are done in real-time. Aside from fighting the monsters, there are various chests and crates that can reveal additional useful items and collectibles.