Unlike the previous titles, Shadow Legacy is a hybrid action/roleplaying game. After initial guidance and being granted the Shadowstone from Elder Tomas, Spyro embarks on an adventure to master the martial art of dragon-kata and the use of magic, rescue everyone and unravel the mystery of the Shadow Realm. Not long after he falls asleep on the beach prior to going there, a dark storm appears and traps everyone within the Dragon Realms, Avalar and the Forgotten Realms in a strange dimension known as the Shadow Realm.
The game starts after the defeat of Red and at the end of a vacation at Dragon Shores, with Spyro's friends departing back to their homelands before wishing him the best of luck with some magic training at the Dragon Temple.