The game takes place on the continent of Elibe, set twenty years after its prequel, Fire Emblem: The Blazing Blade, Starring the son of protagonist Eliwood, Roy.

1,000 years before the events of the game, the land of Elibe was the scene of The Scouring, a brutal war between humans and dragons over the control of the land. Late in this war, mankind forged nine powerful dragon-slaying weapons, the Divine Weapons and the Binding Blade, and gave them to eight powerful fighters who became known as the Eight Legends to use to finish the war. However, the sheer power imbued in the weapons tore apart the balance in the laws of nature when clashed with the dragon's own power, a phenomenon later called the Ending Winter.

After the war, fearing the power of the weapons and the possibility of someone using them to cause a catastrophe, the weapons were sealed away in hiding places across the continent. Over the thousand years, the weapons remained undisturbed, and the continent is mostly at peace.

However, this peace is soon ended when Bern suddenly invades Sacae and Ilia and swiftly takes control of the two countries. They then turn towards the small country of Lycia. Roy then leads the League of Lycia's army against the forces of the militant country of Bern shortly after his father falls ill.