Magic Knight's tutor, Gimbal the Wizard, was trying to cast a spell. Unfortunately, he cast it wrongly, and now Magic Knight has been transported to the Castle of Karn with Gimbal and seven other characters. Magic Knight must find a way to rescue all of them.
The gameplay of Spellbound is quite different to its predecessor, Finders Keepers, in that more emphasis is placed on manipulating objects, interacting with characters and casting spells. Spellbound is the first game in the Magic Knight series to use the Windimation system, in which commands are executed by selecting options from a drop-down menu.