The game centers on the journeys of Ventus, Terra, and Aqua, characters briefly featured in Kingdom Hearts II, in their quest to locate the missing Master Xehanort and protect the worlds from creatures known as the Unversed.

Birth by Sleep is an action role-playing game with hack and slash elements that introduces a gameplay aspect to the series called the Command System.

The Command Board plays like a simplified version of Fortune Street, as a die is thrown and the player moves, with each space having its own unique effect on them.

[5] The recommended scenario order of play by Nomura is Terra, Ventus, then Aqua, as it allows the player to best understand the story.

[17][18] Like other games in the series, the player progresses through a collection of various worlds, based on various locales from the Disney animated features canon: Dwarf Woodlands (Snow White and the Seven Dwarfs), Enchanted Dominion (Sleeping Beauty), Castle of Dreams (Cinderella), Olympus Coliseum (Hercules), Deep Space (Lilo & Stitch), Neverland (Peter Pan), and Mysterious Tower (Fantasia).

[13] The game also features various new worlds specially created for the series by Square Enix, such as the Land of Departure and Radiant Garden.

[8] The most prominent of these characters is Mickey Mouse,[7] the king of Disney Castle, who serves as a Keyblade apprentice under the sorcerer Yen Sid at this point in the series.

After learning about these developments from Yen Sid, Master Eraqus sends Terra and Aqua to travel across the various worlds to destroy the Unversed and find Xehanort.

[28][29] As the three travel through several worlds, Terra attracts the attention of villains who offer him Xehanort's whereabouts in exchange for assistance in their own agendas.

Xehanort further instructs Terra to destroy Vanitas, the source of the Unversed, who was created from the darkness extracted from Ventus's heart.

[30] The three friends briefly reunite at Radiant Garden, but a schism forms between them when they argue over Terra's presumed actions and Aqua's espionage.

[35] Ventus is instructed to do the same by Vanitas,[36] as is Aqua by Yen Sid upon being informed of Eraqus's demise at Xehanort and Terra's hands.

[40][41] After learning of Ventus's condition from Yen Sid, Aqua puts his body in stasis at the Land of Departure, which she transforms into Castle Oblivion.

[45] In the game's secret ending, Aqua meets Ansem in the realm of darkness and learns from him about Sora, who has the power to save those connected to his heart.

When development resumed, the team changed the platform to the PlayStation Portable so as to make use of the PSP's functions such as co-operative and competitive multiplayer gameplay.

[52] Various parts from the plot had to be modified to make the game more light-hearted such as Eraqus' death at the hands of Xehanort after being defeated by Terra, how Aqua's scenario was supposed to end with her already trapped in the Realm of Darkness, and the relationship between Ventus and Sora.

[56] New trailers were shown at the 2008 Jump Festa in December 2007 and the DKΣ3713 Private Party, an invite-only event by Square Enix for fans, in August 2008; a playable demo was also available at DKΣ3713.

[57][58] The June 5, 2009 issue of Famitsu covered an interview with Tetsuya Nomura, where he said that the game was, at the time, at the voice recording stage.

[16] In late October 2009, Nomura revealed that he was currently designing the cover art for Birth by Sleep as well as editing the staff rolls due to there being three main characters in the game.

[82] By November 2010, the game had sold 1.27 million units worldwide with 310,000 and 190,000 copies coming from North America and Europe, respectively, and the rest from Japan.

[57] 1UP.com echoed similar statements, praising the visuals and stating it "plays better" than the previous Kingdom Hearts games.

[67][74] While Eurogamer cited that the three characters had little impact to the Disney worlds' storyline,[65] Terra's role was praised by 1UP.com for distancing itself from previous scenarios.

[64] Although the lack of Final Fantasy characters received mixed opinions, PSM thought that it helped to expand the exploration of Disney worlds,[73] while Zack's role was found suitable by GameZone.

A new boss known only as the Unknown appears in the overseas versions, as well as a new gameplay element called "Crown Stickers", which act much the same way as the Puzzle Pieces from Kingdom Hearts II Final Mix.

[50] The game also has a notable voice-acting cast of returning members such as Jesse McCartney and James Woods, as well as numerous new actors such as Willa Holland, Jason Dohring, Leonard Nimoy, and Mark Hamill.

[97] Additionally, the tracks featured in the game have been released as part of a three-disc album which includes the soundtracks from Birth by Sleep, 358/2 Days and coded.

[98] In early 2010, Nomura was asked in an interview if Square Enix would release an international Final Mix of Kingdom Hearts Birth by Sleep, to which he replied he would like to, as he enjoyed the work from the English voice casting done in the previous games.

[50] In September 2010, Square Enix announced that Kingdom Hearts Birth by Sleep Final Mix would be released on January 20, 2011, in Japan.

[99] Like all Final Mix releases, it combines English audio with Japanese game text and subtitles, and includes all additional features implemented in the Western versions as well as brand new content,[100] such as a new playable secret episode for Aqua, which takes place after the events of the final episode, and also has new cutscenes with dialogue provided by her voice actress Megumi Toyoguchi, which were later dubbed into English by Aqua's English voice actress Willa Holland for the HD 2.5 Remix release.

[101] Final Mix topped the video game charts following its release with 77,317 units sold in the first week, and reaching 106,276 in February 2011.