Taking place on a post-apocalyptic Earth, the unnamed player-character must interact with the few human outposts that remain, all of whom have suffered a form of amnesia, to understand what has happened to the planet.

[1] Microsoft sought to use Phantom Dust to draw in a larger market in Japan for the Xbox, bringing in Yukio Futatsugi, director of Panzer Dragoon, to design and produce the game.

Phantom Dust supports multiplayer through split-screen (on the same console), System Link or over Xbox Live, allowing up to 4 combatants to battle with an Arsenal based on their progress within the game.

One day, a team of Espers from the main human underground complex find a pair of capsules in one of the ruined structures, containing two men: the player protagonist and a man named Edgar.

He flew too close to the event horizon of a black hole, and though the trip was only three days to him, he found that 10,000 years had passed on Earth due to gravitational time dilation, humanity having wiped itself out long ago, leaving the empty Dust-filled planet.

Edgar found he was able to control the dust to a point where he could create self-aware human constructs, including Freia, his girlfriend before he left Earth, and the protagonist, his best friend.

[4] A United States release had originally been planned until August 2004, when Microsoft announced the U.S. version's cancellation, but left open the possibility of U.S. sales if Western demand was high enough.

Spencer had praised Phantom Dust and felt the mechanics in the original Xbox version were "ahead of their time" and could be better released in more modern gaming systems.

[9] The two companies agreed in Q2 2014 for a $5 million budget to create a multiplayer-only version of Phantom Dust that would fit well into the growing eSports community, working under the codename "Babel" and targeting an August 2015 release.

[9] Shortly after starting development, Microsoft asked Darkside to include a single-player campaign alongside the multiplayer element, but did not grant any additional funds or time.

Darkside, not wanting to lose their opportunity with this title, decided to start creation on a vertical slice of a single-player campaign to help convince Microsoft to provide the additional funds and time.

[9] The Darkside opted to go with an art style that balanced realism vs cartoonish approach, describing it somewhere between that of 2008's Prince of Persia and Infamous Second Son.

Microsoft contacted Darkside on February 17, 2015 to formally cancel the project, and because they had put all their efforts into the game, the studio was forced to lay off all of its employees and close down.

[12] In June 2015, Microsoft stated that since the removal of Darkside, the project was placed on hold until they could find a studio to work with to develop the title, but they remain committed to producing a new game.

[6] Microsoft announced its plans to re-release Phantom Dust in emulation for the Xbox One during its press conference at Electronic Entertainment Expo 2016.

The re-release, developed by Code Mystics, will use the original graphics and other assets updated for better resolution, and improve support for Xbox Live.

[15] In an interview with Polygon following the announcement, Spencer said he had only learned of this remake three weeks prior, as the effort to craft it was led by Shannon Loftis, the head of publishing for Microsoft Studios.

[16] Adam Isgreen, creative director for Microsoft Studios, said that details about the re-release of Phantom Dust had been light as at the time of its announcement, they were still not clear how much they could improve upon the game, complicated by the fact that they did not have the complete final source code from Japan, requiring them to reverse engineer and hack into the original game's binaries to assure what steps they could take.

They were able to rework all of the arsenal sets so that they can be updated and rebalanced through patches, and the release will include free and paid downloadable content to expand the title.

[17] Spencer stated in January 2017 that the goal was to have the game released prior to the Electronic Entertainment Expo in June 2017, though Loftis would make the final call on the timing.

Many reviewers, including GameSpot, have noted the game's low purchase price of $20 as a bonus, especially in relation to its high gameplay content.