The game takes place in the expanded Star Wars Universe, almost 4,000 years before the events described later in the films. The game begins on the ship "The Endar Spire ", attacked by the Sith fleet near the planet Taris. Player and one of the pilots, Carth Onasi, descend on the planet in an escape pod. Their primary goal is to find a Jedi named Bastila Shan, who commanded their ship. She has the mastery of battle meditation, by which the Republic has managed so far to withstand the onslaught of the Sith.

Knights of the Old Republic is the first computer game, which takes place in the author's world of Star Wars. Battles go through in real time, but they can be suspended at any time. The main character balances between good and evil, and each of his actions depends on his belonging to the Light or Dark sides of the Force, and ultimately the ending of the game.

In place of magic came the Force Powers that is vested in the Jedi, and they are divided into three categories: light, dark and neutral. Any Jedi can study any force that is sufficient for his level.