With the threat of the evil Xehanort's return, King Mickey and Yen Sid have begun preparations to combat him. Their first step is to turn Keyblade wielders Sora and Riku into Keyblade Masters. Sora and Riku are given the task of completing the Mark of Mastery exam which when completed will help them obtain a great power to aid in the fight against Xehanort. This test will not be so easy as the two must venture together into seven Sleeping Worlds and find the the Keyholes of Sleep to awaken them. Along the way they meet new friends and face new enemies in worlds completely new to them. These challenges will forever test their abilities and lead to an ultimate test to prevent the darkness from overtaken their light.
Dream Drop Distance takes place immediately after the events of Kingdom Hearts II. Sora learns from a letter he receives from King Mickey that he is the only one who can save those lost who are connected to him; referring to the characters Ventus, Aqua, and Terra from Birth by Sleep. Sora and Riku travel to worlds based on settings from various Disney properties such as La Cité des Cloches (The Hunchback of Notre Dame), Prankster's Paradise (Pinnochio), Symphony of Sorcery (Fantasia) and The Grid (Tron).
The game utilizes a gameplay mechanic called Flowmotion which allows your character to quickly bounce off walls and scale buildings in short bursts of speed. A Drop system has been implemented which changes the control of your character to either Sora or Riku after a certain amount of time. While playing as Sora/Riku and the Drop Gauge reaches 0, your character will switch to the other who can be in an entirely different world at a completely different time. The game is an action-RPG with gameplay similar to Birth by Sleep in which it uses the Command Deck system. The Command Deck lets you create your own customized deck of actions such as items and spells for quick use. Dream Eaters are introduced as new enemies. Some of these Dream Eaters known as Spirits can be recruited and further enhance your abilities in-game by strengthening your powers and giving you new attacks.