In the year 1286, an evil sorcerer named Zarok plotted to take over the kingdom of Gallowmere with his undead army. It is told in legend that the King of Gallowmere's champion, Sir Daniel Fortesque, led his army to victory and managed to kill Zarok before succumbing to his mortal wounds. In reality however, Dan was in fact struck down by the first arrow fired in the battle, with the king choosing to cover it up and declare Dan the "Hero of Gallowmere". Zarok, meanwhile, was forced into hiding and was presumed dead. 100 years later, in 1386, Zarok reappears, casting a spell over Gallowmere to awaken his undead army and steal the souls of the living. However, in the process, he unwittingly revives the corpse of Dan, who has over time become a skeletal corpse, missing his jaw and the eye he lost in the battle of Gallowmere. Having been unable to ascend to the Hall of Heroes due to his failures in life, Dan uses this opportunity to defeat Zarok, save Gallowmere and earn his place as a true hero.

As Dan travels across Gallowmere, fighting his way through Zarok's hordes and confronting all manners of beasts, he soon arrives at Zarok's lair, fighting off Zarok's skeletal warriors using the souls of his old allies retrieved by collecting the Chalices. After also managing to defeat Zarok's champion, Lord Kardok, Zarok turns into a powerful monster, but Dan manages to defeat him. As Zarok uses his last breath to cause his lair to collapse, Dan escapes and Zarok's magical influence over the land is thwarted, restoring the souls back to the living and putting the dead back to rest. With the magic cast on him also wearing off as a result, Dan returns to his burial chamber where he once again enters eternal slumber. If the player has managed to collect all the Chalices, Dan will ascend to the Hall of Heroes, where is hailed as the rightful Hero of Gallowmere.