The story follows Noah and his two childhood friends, Eunie and Lanz, who are from Keves, and Mio and her two fellow servicemen, Sena and Taion, who are from Agnus.

They gain the power to fuse together, known as Ouroboros, and decide to cooperate to uncover the mystery behind the perpetual war and the true nature of their world.

Up to 19 Heroes are available in the base game, each with different skills and abilities, and can be recruited to the party through story events or sidequests.

Like the previous entries, the game has an open world design, with a day-and-night time cycle that affects in-game events, such as the availability of quests and items.

Xenoblade Chronicles 3 has an action-based battle system, where the player controls the current lead character in real-time, and party members "auto-attack" when enemies enter their attack radius.

Party members use abilities called "Arts", which can deal bonus damage or inflict status ailments depending on a character's position in relation to the enemy.

Each character has a starting moveset based on a Class, which consist of different styles of fighting and abilities, but all fall under one of three main roles: "Defenders", who draw enemy aggro towards them and tank attacks by blocking or evading them; "Attackers", who deal damage and utilize positional Arts to deal increased damage and/or trigger certain effects, such as combos or status effects; and "Healers", who support the party with heals, buffs and debuffs.

Early on in the game, specific pairs of characters—Noah and Mio; Eunie and Taion; and Lanz and Sena—gain the ability to fuse into Ouroboros, larger forms that are invincible and have stronger Arts.

[3] The world is divided into Colonies, each with their own giant mecha called a Ferronis, fueled by the life force of fallen enemy soldiers trapped in a Flame Clock.

They fight to fuel their Colony's Flame Clock and survive to the end of their tenth Term in hopes of receiving a Homecoming ceremony.

Other major characters include the Vandham family, who lead a faction called the Lost Numbers that consists of Guernica, his daughter Monica, and granddaughter Ghondor; Melia Antiqua from Xenoblade Chronicles and Nia from Xenoblade Chronicles 2, who are the queens of Keves and Agnus; and Moebius, an organization led by Z that manipulates the war between Keves and Agnus and is made up of powerful beings called Moebius that oversee the colonies.

Other major characters include Panacea and Linka, Shulk's and Rex's respective protégés; and Alpha, a being born from Alvis from Xenoblade Chronicles.

[8] With the Consuls having ordered Keves and Agnus to hunt them down, Noah and Mio's teams band together to reach Swordmarch, liberating Colonies along the way by destroying their Flame Clocks.

Monica explains that Moebius orchestrated the war to harvest life energy in an endless cycle,[10] and that the true Queens created the power of Ouroboros to oppose them before going into hiding.

The group stages a prison break, but is betrayed by Shania of the Lost Numbers and ambushed by N and his partner Consul M, a woman physically identical to Mio.

[23] The party members part ways and Noah and Mio share a kiss before the worlds separate, promising to reunite one day.

As he heads for a fireworks show, Noah hears the sound of Mio's flute playing and decides to follow the music, disappearing into the crowd.

Later, they encounter Shulk and Rex, the leaders of a resistance group called the Liberators who are sheltering City survivors and those who seek to escape from Moebius' rule, along with their students Panacea and Linka and their mechanic Riku.

Rex and Shulk explain that they have currently formed a truce with Moebius to fight their common foe, Alpha: an artificial intelligence derived from Alvis that is controlling Origin.

Before they leave, Shulk and Rex use their newfound authority to extend Nikol and Glimmer's lifespans and tell the party that they are confident Moebius will eventually be defeated.

Xenoblade Chronicles 3 featured an "Expansion Pass" available for purchase at the game's launch, which provides access to four volumes of downloadable content that were released over the following year.

The fourth and final volume was released on April 26, 2023, and includes a new story scenario, Future Redeemed, which takes place centuries before the events of the main game and follows a new cast.

Completing Future Redeemed unlocks an additional challenge battle, through which the player can earn Shulk and Rex as heroes in the main game.

"[53] While feeling the ending didn't adequately resolve the story, Nintendo World Report wrote the game had the best balanced combat in the series, "It is challenging yet excellently paced.

"[52] IGN criticized the pacing of the game, saying the included filler was unnecessary with the 150-hour runtime, "one section that has you go undercover to perform menial tasks, or another that has you trotting across the world to collect pieces of metal, and I often felt like my time wasn't being respected.

"[50] Game Informer felt the world didn't have enough to do, and all of the biomes seemed to blend into each other at a certain point, "Beyond challenging monsters, collecting respawnable drops, and recruiting heroes at Keves or Agnus settlements, there's not much to do or see.

"[47] PCMag wrote that the Switch seemed unable to keep up with the game's large vistas and combat, "here are noticeable resolution drops and object pop-in abounds.

"[60] Eurogamer praised the game for capturing the sense of freedom found in older JRPGs, "the sensation of running through endless fields of long grass with your companions, facing impossible odds with a spring in your step.

"[49] Polygon liked the new optional content, feeling it was some of the series' best, "There are well over 100 side quests, and though their objectives could be rote, each told me something about how one lives in this world.

[62] It was also the bestselling physical game during its first week of release in the UK, where it had the biggest launch for the entire Xeno franchise in terms of copies sold.