The game takes place in a science fiction setting of the Solar System where the player is cast as Material Defender, a mercenary who must help an organization known as the Red Acropolis Research Team to stop robots infected by an alien virus.

The game begins moments after the events of Descent II, with the Material Defender escaping the destruction of a planetoid where he was clearing PTMC's robots infected by an alien virus.

He was about to return to Earth to collect his reward, but a malfunction occurred with the prototype warp drive in the ship he was piloting, making it drift towards the Sun's atmosphere.

The director also tells the Material Defender that, while he was clearing the mines during the events of Descent II, PTMC executive Samuel Dravis was actually testing and modifying the virus and deliberately tried to kill him by overloading the warp drive on his ship.

After some persuasion and offers from the director, including a new ship and an AI assistant known as the Guide-Bot, the Material Defender accepts to help the Red Acropolis stop the virus.

[14] The Material Defender is first sent to Deimos to obtain information about the location of a scientist named Dr. Sweitzer who has evidence of the PTMC's actions.

[16] After a series of missions, the Material Defender and the Red Acropolis Research Team manage to develop an antivirus and convince the CED that they are not terrorists.

[17] In the ensuing confrontation in his stronghold, Dravis is mortally wounded by the Guide-Bot's flares and the Material Defender deactivates the virus, which disables all of the PTMC's robots.

[19] The company was founded when Parallax Software, creators of previous Descent games, decided to split in two: Outrage Entertainment and Volition.

Volition would focus on creating the combat space simulator FreeSpace games, while Outrage would continue with the Descent series.

[19][21] The developers worked to incorporate a number of ideas they had for the original Descent which they were unable to realize for that game due to the limitations of time and the technology that was then available.

[24] The new technology also allowed the developers to create both indoor and outdoor environments; one of the biggest complaints of Descent II was the fact that it was considered too "tunnely".

[21] With this technique, developers could create hybrid levels where the player could transit from indoor to outdoor areas in real-time and without loading screens.

[21][25] Leighton commented that whenever one of these transitions occurs, "the game code [switches] collision detection, rendering, and so on, to use the terrain engine.

[24] In addition to the changes in the game's engine, the developers decided to improve the artificial intelligence to give each enemy a distinct behavior.

According to Matt Toschlog, president of Outrage Entertainment and lead programmer of Descent 3, "It's very rewarding for the player to meet a new enemy, get to know him, learn his quirks, and figure out the best way to kill him.

"[24] Originally, the developers planned to add weather effects that would disorient the player's ship during gameplay, but this feature was ultimately not implemented due to time and technology constraints.

The second demo included a single-player level and several multiplayer matches which could be played through a matchmaking service provided by Outrage.

[27][28] From March to August 1999, Interplay held a Descent 3 tournament in the United States consisting of three phases where numerous players could compete against each other in multiplayer matches.

[8] GameRevolution remarked that the addition of outdoor environments allows "greater use of the maneuvering capabilities, adds variety to the levels, and ensures that the game never gets dull or boring".

GameSpot pointed out that "explosions erupt with lots of satisfying, floor-rattling bass, lasers ping nicely, flamethrowers emit appropriate rumbling whooshes, and there's plenty of ambient beeping, hissing, and mechanical humming".

[51] Game Revolution praised the graphics for their "modeling, colored lighting, incredible special effects, wonderful animation, [and] sheer overall feel".

[2] Victor Lucas of Electric Playground stated similar pros, but also admitted that the game's hardware requirements were relatively high.

GameSpot considered it not compelling,[51] while Jason Cross, writing for Computer Games Magazine, felt that it "really doesn't have much to do with actual gameplay".

[5] PC Gamer reviewer Stephen Poole also criticized the Guide-Bot's efficiency, remarking that sometimes it can get lost or trapped while leading the player to a destination.

[2] Maximum PC reviewer Josh Norem praised the levels for their interesting objectives, stating that the missions "vary widely, ranging from finding lost colleagues to defending strategic structures against enemy assaults".

[54] Computer Games Magazine also credited its "rock-solid performance on standard dialup modems and easy connectivity",[5] while GameSpot praised it for being "fun and stable".

[60] A writer for PC Accelerator remarked that this figure was "not enough to keep publishers plugging at long, expensive development cycles in the hope of scoring a Half-Life".

Conversely, PC Player's Udo Hoffman reported a German retailer's view that "the genre is no longer popular", and that demand for a mission pack was at "0.0 percent".

Using the game's editing module, the researchers created a virtual environment consisting of a flat plane with rectangular pillars, across which the animal successfully navigated.