Throughout the game, the adventurers travel the Isles of Terra, a grouping of separate, flat "nacelle" worlds drawn from the Void onto the oceanic planet of Terra by Sheltem himself in previous years. Driven against the Ancients, Sheltem is now launching their nacelles into the suns of various worlds, snuffing out countless lives in his wake. Driven by the tales told in Corak's journals regarding the Ancients, the Elemental Lords and the "Forces of the Dome", the heroes pursue the Guardians, battling terrors along the way.
Finally, the heroes enter the so-called "Maze from Hell" and earn the title of "Ultimate Adventurers" from the maze's defences. Uncovering revelations about Terra's past, they gain access to the Pyramids of the Ancients, stumbling upon what is named a 'Main Control Center'. They find themselves within the underwater seedship originally used by the Ancients in centuries past to colonize Terra with human life before its submersion beneath the waves.
At the game's conclusion, Sheltem pilots an escape pod within the underwater ship and sets off for the nacelle of Xeen, with Corak in close pursuit. After departing, Corak hastily contacts the adventurers from his escape pod, instructing them in the means of matter transferral to land the seedship - named the "Lincoln" - safely. They set off to pursue Corak and Sheltem in the Lincoln, and it is implied that they actually do so in Might and Magic IV: Clouds of Xeen. However, they did in fact drift off-course and are next seen as powerful non-player characters in Might and Magic VII: For Blood and Honor.
Textual character summaries in the lower portion of the screen are replaced with a graphical heads up display, featuring the faces of the player characters, which wear different expressions depending on the condition of the character. Spells are selected from a list: an improvement on previous games where they had to be specified using numeric codes. Level maps were no longer limited to a 16 x 16 grid, and an automapping function eliminated the need for drawing maps on paper. Also, enemy creatures can now be seen as they approach, or are approached, from distant squares. In previous games the enemy creatures were only detected when they were in the same square as the player characters, which made combat more difficult to avoid. The ability to shoot at a distance also gives ranged weapons a more distinct tactical advantage. At the end of combat, players do not have to "search" for loot as in previous games.
The player can save the game state at almost any time, with the notable exceptions of the Arena and Castle Greywind Dungeon, at which the player cannot store game state. In previous games, saving was accomplished by visiting an inn and signing the registry. Saving the game also records that enemy creatures have been killed; in previous games traveling to a level from an inn, fully populates the former with monsters every time.