Racing Lagoon follows the story of main character Sho Akasaki as he navigates through 10 nights of street racing in Yokohama, Japan. His goal is to become the king of the underground racing scene. With each victory, he earns experience and rewards points that can be used to acquire parts from his opponents' cars.
The gameplay of Racing Lagoon is centered around high-speed street racing. Players must challenge other cars on streets modeled after actual roadmaps of Yokohama, Japan. Winning races awards reward points that can be used to upgrade and customize the player's vehicle. The game requires strategy and skill to outmaneuver opponents and emerge victorious.