Set in 19th century Japan, the player takes on the role of a rōnin who wanders into a remote village and becomes involved in a conflict between rival clans.

The game begins with the player, taking the role of a wandering rōnin by the name of Kenji, arriving in a fictional outpost called Rokkotsu Pass.

Rokkotsu Pass is a sparsely populated village, whose main attractions include a railway crossing, a small restaurant, and an iron foundry.

The government army is well-funded and equipped with modern weaponry, including firearms and cannons, making them formidable opponents for the former samurai lords.

The second faction is the Kurou family, who previously held sway in Rokkotsu Pass and continue to exert their influence on the people through extortion and intimidation.

Led by Tesshin Kurou, the family is resisting the government's attempt to take control of the pass, however the samurai cannot compete with the modern army.

Although the story in Way of the Samurai follows the basic framework provided above, the actual events that the player participates in depend greatly on the decisions made while playing.

The player may choose to join either the Kurou family or the Akadama clan, to support and protect the innocent villagers, or to take no side and observe the events as an outsider with minimal direct involvement.