The game is set on Alrest, which has no stable land, but instead is made of a sea topped with clouds, called the "Cloud Sea". Legends claim humanity once lived atop the World Tree in a paradise called Elysium with their creator, the Architect, but they were exiled for unknown reasons and given Titans, which range in size from boats to small continents, to live on. Blades are powerful beings summoned from "Core Crystals" who channel power into their weapons through a force called ether. Their masters are called Drivers; when a Driver dies, their Blade reverts to a Core Crystal and lose their memory when another Driver awakens them. At the game's start, the nation-states Mor Ardain and Uraya are on the brink of war. Young, orphaned salvager Rex is hired by the Argentum Trade Guild Chairman Bana to aid Jin, Malos, Nia, and their Blades in the salvage of an ancient ship. In the ship, they find Pyra, a legendary and especially powerful Blade known as an Aegis. When Rex reaches out to touch Pyra's sword, Jin fatally stabs him. Rex awakens on a field with Pyra, who reveals they are in a memory of her old home Elysium. She asks him to bring her to Elysium and in exchange gives him half of her Core Crystal to revive him.
The biggest change to the gameplay comes from Blades, sentient beings summoned from "Core Crystals" who provide their summoners - called Drivers - weapons in combat and make up the player's party (separate from the character party). Each character can only have three Blades active at a time. The Blade equipped on a Driver determines their class, and Blade weapon types are divided into three main categories: Attacker, Healer, and Tank. Blades support their Driver in the form of buffs and special attacks performed by both a Driver and their Blade. Buffs and other upgrades can be unlocked through a Blade's Affinity Chart.