The main character receives a letter asking for an assistant from an old friend named Ardo, now living in Ferdok. On the way, the character arrives at the hamlet of Avestrue and finds that the word of two notables persons is needed to proceed to the city. The characters Rhulana the amazon and Draenor the thief are met here. Upon reaching Ferdok, the character learns of the reason for the access restrictions. Recently, Ferdok is shaken by a series of gruesome deaths, and Ardo is one of the victims. Thus begins a lengthy investigation to find the connection and put a stop to the murders. They turn out to be the work of the Dragon cultists, an ancient cult that serves Ardakor, an ancient evil dragon.
After inheriting Ardo’s house, the main character is chosen by the oracle of Umbracor, the Dragon Emperor, to be the champion of the Dragon Quest. At the marshes of Moorbridge, the party stops an infestation of undead and saves the Archmage Rakorium. In the Blood Mountains, the party retrieves the Book of Serpent from a ruined castle where the Dragon cultists are planning dark magic. Finally, they travel to Grimtooth Castle, which has been overrun by orcs and dragon cultists, to obtain the Dragon Eye. Upon defeating the boss of each quest, the hero retrieves the components of a powerful suit of armor.
The character’s next task is to find the Adamantine Heart. Doing so requires traveling to the underground dwarven city of Murolosh. However, to gain permission into the city, the party needs the assistant of an emissary named Gerling, who has traveled to the town of Tallon. In Tallon, the party is drawn into a struggle to save the town from a horde of orcs, then eliminate Jafgur, a young fire dragon raised by the Dragon Cultists. With the help of Dwarven Prince Aron, they manage to slay the dragon.
Once invited to Murolosh, the main character helps investigate an attempted assassination and save Salina, an acquaintance met in Avestrue. Afterward, they gain the means to enter the undead-infested Deeps of Gruldur, to acquire the final component for the armor. Back to Murolosh, the party finds that Arombolosh the Dwarf King has been possessed by Jafgur’s heart crystal, which was put on his crown as per tradition. They successfully subdue the king and destroy the crystal, foiling the cultists’ plan once more.
The party then travels to Fire Falls and discovers the Adamantine Heart. As it turns out, it is the heart crystal of Umbracor the Dragon Emperor. Pal Na’Thar, the last of the cyclops and Umbracor’s oracle, has been guarding the heart and keeping it out of Ardakor’s reach for centuries. The Dragon Quest is meant to find his successor. The Heart is then stolen away by Malgorra, a sorceress and Dragon Cultist. Pal Na’Thar forges a weapon for the Dragon Champion and urges the party to retrieve the Heart and put an end to the cultists’ plan.
On Drakensang Mountain, King Arombolosh assembles his best warriors and storm the cultists’ fortress. Assisted by the dwarves, the party eventually confronts Malgorra, who transforms into a great, hydra-like dragon. The party defeats Malgorra, but Ardakor successfully consumes the Adamantine Heart. However, with Archmage Rakorium’s magic, Umbracor’s soul awakens from the heart and takes over Ardakor’s body. Umbracor commends the bravery of the party and flies off to the sunset.