Fifty years before the events players know, Alteria is a world split between humans, elves, goblinoids (often called beasts), and dragons. Though the elves and humans once drove the beasts and dragons back into the Dark Mountains, a fragile peace masks simmering tensions between the two old powers. In the mountains, a dark gem sits in the chest of the sleeping Black Dragon Karas, a source of vast power that quietly begins to stir evil and unite the beasts into an ominous army. The threat remains hidden from most, even as old rivalries flare and danger creeps closer to the human heartlands.
A cocky, adventurous human boy, Lambert, and his dogs One and Two have a narrow brush with a large beast band on a raid. Just when death seems certain, they are saved by a famous trio: Barnac, a legendary mercenary and captain of a flying ship; Geraint, a renowned dragon fighter; and Argenta, Geraint’s sister. The quartet heads for the human kingdom of Saint Heaven, where two Elven maidens—Nerwin and her companion, Liya—have secretly traveled to plead for an alliance against the beast threat. In their bid to secure a weapon and a future, Lambert crosses paths with Liya, and the two join forces with the adventurers to fend off a beast assault on the capital. The Imperial Knights, led by Velskud, eventually restore order long enough for the king to agree to the alliance.
As talks continue, Liya spots a shadow flitting near the king’s dining hall and follows it with Lambert. They stumble upon a clandestine gathering that includes the king, Terramai (the priest and adviser), Karacule (a sorceress), [Nerwin], Barnac, [Geraint], Argenta, and Velskud. They discuss the rising menace of Karas and how the gem could become both the source of power and the key weakness. An argument breaks out over who should control the gem, and Lambert interrupts with a bold plan for a combined diversion and infiltration. The plan is approved, but Lambert and Liya are nonetheless cast aside. Listening in, they learn the gem’s dark power preys on those with weak hearts and will.
That night, Velskud is joined by Elena, a Dark Elf who covets the gem for herself. Elena’s promise of rulership entices him, and he betrays the king before joining the others on a secret mission. Lambert receives a sword from an old blacksmith in return for guarding his trusted companions One and Two, and the team sets out across the Dark Mountains aboard Barnac’s ship. A violent lightning strike forces a crash, leaving the group to press onward on foot.
The journey takes them through haunted ruins where the specters of a long-ago elven battle linger. A bat scout of Karas taunts them, and Velskud attacks before the heroes fend it off. As the trek continues, Lambert and Liya begin to develop feelings for each other, while Geraint and Argenta guard a secret tied to the Dragon’s gem. The companions discover a concealed entrance to the Dragon’s lair in a glacier, and Geraint unseals it. Inside, an ice-filled chamber reveals a lethal path: ambush by Karas’ guardians forces the heroes to improvise. They escape by collapsing the exit, but not before Geraint and Argenta stay behind. Drawing on the gem’s power in his chest, Geraint awakens a mighty dragon within the ice, and the team reunites soon after.
The Alliance’s assault ignites Karas, who awakens fully and clashes with the group. While the beasts push the heroes back, Liya and Lambert fight bravely against the encroaching army. Liya sacrifices her life to keep Lambert safe, and his cry of grief drives the others to press forward. Geraint taps into a hidden power, transforming into a Golden Dragon to shield the party, revealing that he and Argenta are Half-Dragons who carry Dragon Gems themselves. The revelation sows distrust among the allies, who fear dragons’ power.
Karas descends to battle, and the two dragons—Geraint and Karas—clash above the battlefield. Lambert spots the glowing gem on Karas’s chest and grasps the opportunity to claim it, hoping to turn its further power to his advantage. Argenta ascends as a Silver Dragon to aid her brother, and the trio work together to pry the dark gem free, ending Karas’s threat at last. But the price of victory isn’t cheap: the gem’s corrupting influence still looms over the living.
Lambert pleads for the gem to resurrect Liya, yet Geraint warns him not to touch it and instead gives Lambert his own gem. Lambert uses it to bring Liya back, while Velskud seizes Karas’s gem and intensifies the fight. In a moment of confrontation, Lambert interferes and returns Geraint’s gem to its owner. He duels Velskud, and the dark gem’s corruption turns the knight into a new Black Dragon. An elven arrow—guided by Liya, who has returned from death—distracts Velskud long enough for Lambert to seize Velskud’s sword and fatally wound him.
With Liya alive and by his side, Lambert and the remaining heroes watch Elena depart with a dark gem clutched in her hands. As the credits roll, Lambert reunites with his dogs, whom he affectionately renames Bow and Arrow, signaling a hopeful end to the long odyssey and a new chapter for Alteria.
