The initial cause and origin of the "Knox Infection" remain a mystery, with characters in the in-game radio station, KnoxTalk, speculating a variety of possibilities, including a prion disease, an act of God, or bio-terrorism.

After being infected, individuals first experience a high fever followed by increasing feelings of anxiety and nausea, which will progressively worsen until they succumb to the disease.

The game begins on July 9, 1993, approximately three days after the United States military establishes a blockade surrounding the infected areas of Muldraugh, Riverside, West Point, and Rosewood, dubbed the Knox Exclusion Zone.

The next day, a picture is leaked from West Point to the media showcasing a one-armed man covered in blood and standing among corpses, which fuels fear and panic surrounding the situation.

General John McGrew issues a statement on July 14 assuring that "America is safe" while elaborating on details of the Knox Event, confirming that the infection is spread through direct fluid contact, scratches, and other "un-American" acts of violence.

On July 16, in a desperate attempt to contain the spread, the United States military demolishes bridges over the Ohio River, killing hundreds of escaping civilians and effectively trapping survivors and zombies within Knox Country.

In a final broadcast, General John McGrew addresses the individuals unaffected by the second wave of the Knox Event, urging them to take extreme measures for their survival.

He confirms that while these immune individuals cannot contract the disease naturally, they remain susceptible to infection through fluid contact, specifically citing bites.

In Project Zomboid, the player aims to survive for as long as possible in an apocalyptic and zombie-ridden area around the city of Louisville, Kentucky – referred to as 'Knox Country' – which has been quarantined by the government.

On top of avoiding zombies, the player has to manage their personal needs (such as hunger, stress, fatigue, and boredom) to stay alive through resting, scavenging for supplies, and using survivalist techniques.

[5][7] The world becomes more desolate and decrepit as time progresses, with water and power grids shutting off within a month, followed by the erosion and overgrowth of the region's structures.

Twice a week, development blog posts called "Thursdoids" detailed sneak peeks on updates and improvements planned in the next build, as well as community-made mod showcases.