The game takes place in the fictional continent of Elibe, which is split into six nations of diverse ruling styles: Lycia, Bern, Etruria, Sacae, Missur, and Ilia. There is an archipelago to the northwest called the Western Isles, and is composed of Caledonia, Fibernia, and Dia.
Lycia is ruled by a collection of noble houses that include Ostia, Pherae, Thria, Laus, Worde, Khathelet, Araphen, Caelin, Ryerde, Santaruz, Tuscana, Tania, Badon, and formerly Cornwell. Each one is ruled by its own Marquess. Ostia, the most militarily powerful territory within Lycia, functions as the central ruling territory. This system of government known as the Lycian League was founded by the Champion Roland, one of the eight legendary heroes, after the Scouring. The country is fighting a huge scale war with Bern during the game.
Bern, founded by the Hero Hartmut, is a monarchy notable for its powerful military, located in the southeast mountains of Elibe. It is the only nation in all of Elibe that employs Wyvern Riders in the army. It is revealed in the game that King Desmond was killed by his son Zephiel after Desmond's attempt to assassinate Zephiel failed.
Etruria is the base of St. Elimine’s church. Most of the nation's residents are naturally blonde; a trait passed down to them as descendents of Elimine, one of the eight legendary heroes. Saint Elimine herself founded Etruria after the Scouring, and her legacy continues to live on in her people. It is home to many sorcerers and monks that have spent their lives studying the magical arts.
Sacae is a country of nomadic clans such as the Lorca, the Kutolah, and Djute that roam the land on horseback; Sacae is known for its vast fields and open plains. It is the final resting place of Hanon, Sacae's founder and one of the eight legendary heroes. It has no central government, but a number of clans that govern themselves. The mountains that separate Sacae from Bern house several bandit groups that lie in wait to prey upon unsuspecting Sacaeans. It is said that the people of Sacae are unable to ever be dishonest.
Nabata, founded by Archsage Athos, is a massive desert covering the entire peninsula of Missur. The Nabata Desert is home to the great city of Arcadia. This oasis utopia is populated by both humans and dragons in harmony. The ruthless desert climate deters most travelers from visiting the region, serving as a perfect natural defense for Arcadia.
Ilia, founded by the Great Knight Barigan, is located in the northeastern part of Elibe, and it is known for its beautiful pegasi that roam the lands freely. Its snowy climate hampers agricultural development, and as a result, the nation's citizens commonly live mercenary lifestyles in order to survive. It is home to the renowned House of the Pegasus Knights.
The Western Isles, founded by Durbans the Berserker, are located in the northwestern ocean. It houses several bandit groups, and is currently run by the pirate clan, vicious warriors known for their brutal strength.
Valor, also known as the Dread Isle, this small island is feared by most seafarers. Covered in dense fog is the Dragon's Gate, a mysterious portal to the realm of dragons. It plays no role during the events of Fire Emblem: Fūin no Tsurugi.
Fūin no Tsurugi takes place on the fictional continent of Elibe and stars Roy, the son of Fire Emblem protagonist Eliwood. Roy leads the League of Lycia's army against the forces of the militant country of Bern shortly after his father falls ill.
The story begins when King Zephiel, ruler of the kingdom of Bern, finishes the brutal conquest of Ilia and Sacae and sets his sights on Lycia. With the war coming to his own country, Roy is sent home to lead Pherae's army to oppose Bern, but soon after he meets Guinevere, the princess of Bern and Zephiel's younger sister, who has escaped from her homeland to search for a way to stop the imminent war between Bern and Lycia. Upon the death of marquess Hector, Roy carries on the Lycian League and makes many promises: to protect Princess Guinevere and Hector's beloved daughter, the mage Lilina, and most importantly, to save the entire continent from Zephiel's mysterious thirst for world domination.