The game begins in ancient Egypt, with Prince Atem sneaking out of the palace to see his friends, Jono and Teana, at the dueling grounds. While there, they witness a ceremony performed by the mages, which is darker than the ceremonies that they normally perform. After the ceremony, Atem duels one of the priests, named Seto, and defeats him.

When Atem returns to the palace, he is quickly sent to bed by Simon Muran, his tutor and advisor. As Simon walks away, he is informed by a guard that the high priest Heishin has invaded the palace, using a strange magic. Muran searches for Heishin. When Muran finds him, Heishin tells Muran that he has found the Dark Power, then uses the Millennium Rod to blast Muran. When Heishin finds Atem, he threatens to kill the Egyptian king and queen if he does not hand over the Millennium Puzzle. Muran appears behind Heishin and tells Atem to smash the puzzle. Atem obeys, and Muran seals himself and Atem inside the puzzle, to wait for someone to reassemble it.

Five thousand years later, Yugi Mutou reassembles the puzzle. He speaks to Atem in the puzzle, and Atem gives Yugi six blank cards. Not sure what they are for, he carries them into a Dueling Tournament. After he defeats one of the duelists, one of the cards is filled with a Millennium item. Realizing what the cards are for, Yugi completes the tournament and fills all six cards with Millennium items. This allows Atem to return to his time.

Once in his own time, Muran tells Atem of what has happened since he was sealed away. Heishin and the mages have taken control of the kingdom with the Millennium items, and that the only way to free the kingdom is to recover the items from the mages guarding them. After passing this on, Muran dies.

After he catches up with Jono and Teana, he goes to the destroyed palace and searches it. He finds Seto, who gives him a map with the locations of the mages and the Millennium items, and asks him to defeat the mages.

After Atem recovers all of the Millennium items but one, Seto leads him to Heishin, who holds the Millennium Rod. Atem defeats Heishin, but discovers that Seto has the Millennium Rod, and merely wanted to use Atem to gather the items in one place. Atem duels Seto for the items and defeats him, but after the duel, Heishin grabs the items and uses them to summon the DarkNite. Hoping to use the DarkNite to destroy his enemies, he doesn't have the item to prove his authority and as a result, the DarkNite instead turns Heishin into a card. Heishin now turned into a playing card, DarkNite now mocks Heishin before incinerating the card. After Atem shows that he had the Millennium Items, DarkNite challenges him to a duel. Atem defeats him, and he transforms into Nitemare, who challenges Atem again. Atem defeats him again, and Nitemare begrudgingly returns from where he came. Atem then is able to take the throne and lead his people in peace.