The game featured standard VGA 16-colored 640x480 screen, complete with party-members, round-based combat, full-screen sprite animation, various monsters, Chinese-styled AdLb music, sound effects, animated spell effects, as well as full Chinese interface, which was a great hit in Taiwan's computer game market at that period.

In the beginning of the world, the goddess Nüwa created two kinds of intelligent life: those of men, and those of monsters, who warred among each other all the time. The Sword was created by men in an attempt to end the everlasting war. Led by a single heroic figure, Xuan-yuan Swordsman (軒轅劍俠) who wielded the Sword, the war between humans and monsters ended with both sides suffering heavy casualties. Seventeen years later, the main character, He Ran (何然), a young swordsman left his mentor to set off on a journey into the chaotic world to carve his own path.

The first game in the series, Xuan-Yuan Sword was also Softstar's first RPG product and was released in 1990. The time period the game is set in is ambiguous. The game features a Dragon Quest-like user interface. Players started the game as a novice adventurer with minimal fighting skills and can gain combat experience through battles to enable progression to other areas and advance the plot. The main characters were named after the characters from A Chinese Ghost Story in this game, but their names were retconned in the second game.