[3] Arneson's early work was fundamental to the role-playing game (RPG) genre, pioneering devices now considered to be archetypical, such as cooperative play to develop a storyline instead of individual competitive play to "win" and adventuring in dungeon, town, and wilderness settings as presented by a neutral judge who doubles as the voice and consciousness of all characters aside from the player characters.

In 1971, Arneson created the game and fictional world that became Blackmoor, writing his own rules and basing the setting on medieval fantasy elements.

Wesely asserts that it was during the Braunstein games he created and refereed, and in which other Twin Cities Military Miniatures Group members participated, that Arneson helped develop the foundations of modern role-playing games on a 1:1 scale basis by focusing on non-combat objectives—a step away from wargaming towards the more individual play and varied challenges of later RPGs.

[12][15] Following the departure of David Wesely to service in the Army Reserves in October 1970, Arneson and his fellow players in the Twin Cities began to imagine alternate settings for "Braunstein" games.

Arneson developed a Braunstein in which his players played fantasy versions of themselves in the medieval Barony of Blackmoor, a land inhabited in part by fantastic monsters.

[19] To explain his inspiration for the game, Arneson said:[20] I had spent the previous two days watching about five monster movies on channel 5's 'Creature Feature' weekend, reading several Conan books (I cannot recall which ones, but I always thought they were all pretty much the same), and stuffing myself with popcorn, doodling on a piece of graph paper.

[5][7][10][12][21] The gameplay would be recognizable to modern D&D players, featuring the use of hit points, armor class, character development, and dungeon crawls.

[22] Many of the fantasy medieval foundations of D&D, as well as the concept of adventuring in "dungeons"[23] originated with Blackmoor, which also incorporated time travel and science fiction elements.

"[20] Details of Blackmoor and the original campaign, established on the map of the Castle & Crusade Society's "Great Kingdom",[26] were first brought to print briefly in issue #13 of the Domesday Book, the newsletter of the Castle & Crusade Society in July 1972, and later in much-expanded form as The First Fantasy Campaign, published by Judges Guild in 1977.

Kuntz describes Dave Megarry as the de facto leader of the group, as he understood the Blackmoor game and campaign world.

[9][17][30] Gygax felt that there was a need to publish the game as soon as possible, since similar projects were being planned elsewhere, so rules were hastily put together, and Arneson's own final draft was never used.

[5][17] Further rules and a sample dungeon from Arneson's original campaign (the first published RPG scenario in a professional publication) were released in 1975 in the Blackmoor supplement for D&D, named after the campaign-setting.

[6] Blackmoor presented new character classes for monks and assassins, additional new monsters, and "The Temple of the Frog", the first published role-playing adventure scenario intended for other people to run.

[19][20] Arneson formally joined TSR as their Director of Research at the beginning of 1976, but left at the end of the year to pursue a career as an independent game-designer.

[11]: 39  Adventure Games was profitable, but Arneson found the workload to be excessive and finally sold the company to Flying Buffalo.

[5] In 1986 Arneson wrote a new D&D module set in Blackmoor called "The Garbage Pits of Despair", which was published in two parts in Different Worlds magazine issues #42 and #43.

[11]: 388 In 1988, Arneson stated his belief that RPGs, whether paper or computer, were still "hack and slash" and did not teach novices how to play, and that games like Ultima IV "have stood pretty much alone as quirks instead of trend setters" as others did not follow their innovations.

[44] In the 1990s, he began working at Full Sail, a private university that teaches multimedia subjects,[5] and continued there as an instructor of computer game design until 2008.

[11]: 282 [34] Around 2000, Arneson was working with videographer John Kentner on Dragons in the Basement (unreleased), a video documentary on the early history of role-playing games.

[58] Three days after his death, Wizards of the Coast temporarily replaced the front page of the Dungeons & Dragons section of their web site with a tribute to Arneson.

[62] Turbine's Dungeons and Dragons Online added an in-game memorial altar to Arneson in the Ruins of Threnal location in the game.

[63] They also created an in-game item named the "Mantle of the Worldshaper" that is a reward for finishing the Threnal quest chain that is narrated by Arneson himself.

Arcane runes run along the edges of the fine cape, and masterfully drawn on the silken lining is an incredibly detailed map of a place named 'Blackmoor'.