The Story of Eastern Wonderland casts the player as the Shrine Maiden Reimu Hakurei and offers three distinct attack types to choose from: a wide-range type with weak attack power, a mid-range type with moderate attack power and auto-targeting capabilities, and a narrow-range type with high attack power but lowered movement speed. The bombs also exhibit unique behavior depending on the type chosen.

As the first danmaku shooting game in the Touhou Project, the Story of Eastern Wonderland introduces many features that are now hallmarks of the series as a whole: relatively small hit boxes, boss characters who are not much larger than the player character however are highly mobile, a power-up system, variable-worth point items, an unlockable Extra Stage, and a semi-complex scoring system. The game also marks the first appearance of Marisa Kirisame, who would become a major character in the series, appearing as often as Reimu Hakurei herself.

After returning from a training session, Reimu finds that her shrine has been overrun by ghosts and youkai! Excited by this chance to test her fledgling abilities, she mounts her flying turtle, Genji, and grabs her exceedingly powerful Yin-Yang Orbs so she can go investigate.