Mystic Heroes is a fighting action game, similar to Koei's Dynasty Warriors. Players can perform melee attacks and element spells, which become more powerful with continuous use. The game has eight stages. There are four playable characters, and four unlockable characters in the PS2 version, for a total of eight. The game features a single-player story mode and three additional single-player modes, as well as co-op and versus multiplayer.

Long ago in a legendary land, Emperor Kang and his wife Sheva ruled with an iron fist. Tai and Naja, two elite mystics, sealed them away in Mt. Houshin, thus restoring peace. But Kang's son, Cyrus, built up an army to battle the mystics in an attempt to free his father. At this time two more mystics, Shiga and Lani, joined the fight alongside Tai and Naja. The four mystics along with their friends once again saved the land and returned the peace. Now Emperor Kang, Sheva, and Generals Grifon and Kai start to plan their escape. Grifon brings up the existence of something known as the "Dragon Star", which could free them. So Kang calls upon the powers of the Dragon Star, and he along with all of his minions are set free, giving Kang the chance to rise once again to dominate the land.