Taking place in the fictional land of Vertiel in the middle of a war between the Elves and Red Scribes against an assembly of immortal necromancers known as the Ice Lords and their undead empire, the Frozen Shadows, the story follows Vulcan - a mercenary and demolition specialist in service to the illustrious sellsword company, the Freeborn Blades. During a mysterious ritual conducted by the Red Scribes, something goes wrong and Vulcan is possessed by a fiery demon, endowing them with inhuman powers of strength and magical abilities of pyromancy.
Player choices will have an impact on the ending and their companions, particularly how much of themselves and their freedom they surrender to the demon in exchange for power. Bound by Flame also includes a crafting system, allowing players to create and improve equipment, including their armor and weapons. Several companions will join the player during their quest, and will, depending on the player's actions, develop friendship, romance or rivalry. Using the crafting system, the player can customize weapons and armour with more depth than most other games.