Niji no Silk Road is set in the Middle Ages along the famous Silk Road, which connected China and the Middle East. In the fictional kingdom Littleland, the evil Zrool conspired against the royal family, killing the king and queen and taking the throne. However, one of the king's guards, Radley, safely hid the young heir, who later grows up in Damascus and discovers he is the true prince of Littleland. To save his homeland, the young hero sets out on a quest to find seven magical rainbow pieces.
The game follows an action-adventure style with first-person perspective, turn-based combat, and some unique elements. Unlike many RPGs, Niji no Silk Road does not reward experience points or money from random enemies. Instead, the player's popularity increases by fighting, allowing them to trade items between towns by buying in one town and selling in another. The player must carefully manage their resources, as trading is the only effective way to earn money. Additionally, there is a thirst factor: if the player fails to drink water regularly, they will dry out and die.