[1][2][3] In the world of Orelus, continents called "lagoons" float in the sky, and war is threatened when the kingdom of Kahna is invaded by the Granbelos Empire.

The concept for Bahamut Lagoon was created by Hitoshi Sasaki, known for his graphic design work on Final Fantasy VI, with him describing it as a game he had wanted to make for a long time.

[11][12] The game's setting was inspired by Sasaki's memory of flying over the Izu Peninsula, wanting to evoke a similar feeling of a "floating lagoon".

[21] The updated Bahamut Lagoon translation was the last project completed by Near before their death by suicide in June of that year following an online harassment campaign.

Edge praised the narrative as moving away from its initial premise, and lauding the cast as a blending of strengths between Chrono Trigger and Final Fantasy VI.

[23] French website Jeuxvideo.com noted that the storyline evolved beyond its opening tropes due to how the characters acted and the plot secrets revealed during the last chapters.

[25] RPGamer's Seán Michael Peters noted the use of multiple overused genre tropes, but also praised the story twists and character evolution.

[2] Rox called the visuals and effects "excellent" despite finding them lacking compared to some earlier Square titles on the platform and positively noting the added character movement graphics, additionally praising Matsueda's score.

[2] Rox was mixed on the gameplay, finding it too easy, inferior to that of Front Mission and referring to the title as "basically Shining Force with dragons".

[29] Kurt Kalata, writing for Hardcore Gaming 101 positively noted the story's focus on clashing personalities and its depth of tactical mechanics.

[30] Reviewing the Wii U Virtual Console release, Nintendo Life's Kerry Brunskill noted that it stood out from other tactical RPGs due to its blend of gameplay elements and dragon raising mechanics.

[3] Rolando Orcha of Siliconera praised its blending of tactical and standard RPG elements, hoping for its eventual appearance on other platforms and a localized release.

[31] As part of an interview with Sakaguchi, Simon Parkin of Eurogamer noted Bahamut Lagoon as one of several "fascinating curios" produced by Square during the early to mid 1990s.

[32] In an article on six Super Famicom imports, 1Up.com's Bob Mackey called it a "fantastic game" and a notable title from Square's final year with Nintendo.