Blue Dragon follows a standard tale that sees the main character, Shu, and his friends try to save the world from a maniacal villain bent on destroying everything they love. Along the way the characters discover and develop their shadow powers which sees their shadows transform into powerful monsters that aid them in battle. The story is told through a combination of in-game cutscenes, character dialog and pre-rendered full motion cinematics. As a result of the high resolution video used, Blue Dragon is the first game for the Xbox 360 to ship on multiple DVDs, coming in at three.
The game is divided into two main sections: 1. exploration, and 2. combat. Exploration sees one character (representing the entire party) traveling around the world, speaking to people, gathering items, and moving from point A to point B. Unlike other traditional JRPGs, Blue Dragon forgoes random battles and displays the enemies on the exploration map. This allows you to avoid encounters, or perform special moves such as destroying the enemy without going into combat mode, or having a favorable encounter where you enter the battle in a better position. One ability is the multi-monster match where you can circle multiple enemies and fight them all at once. Depending on their attributes, the enemies may fight one another making the overall battle easier while gaining more points and items.
Once contact with an enemy is made, the game enters battle mode. Similar to other games of this genre the battle sees your party on one side of the arena facing a group of enemies on the other side. Characters take turns in sending out attacks and using abilities, with the ordering dependent on various character attributes. The standard attack, magic, and support menu items are found with the added twist that attacks can be charged. Charging an attack increases its potency at the cost of delaying when the attack actually occurs allowing the enemy to attack first.
Upgrading and improving your characters follows the streamlined approach that Mistwalker applied to the rest of the game. Instead of complicated item and ability systems, characters simply upgrade their shadow forms with new abilities and specialties. A "job" system is used that determines which abilities the shadow will excel at. Shadows can change their jobs at any time without losing any of the abilities they've gained.