Suzuki renamed the game Shenmue, a Japanese word meaning "spirit tree." Originally pitched as an RPG, Shenmue was wildly experimental and combined 3D fighting elements with adventure game-like information gathering and a finely detailed town that players could explore at their own pace.

The setting is modeled on Dobuita in Yokosuka, Japan.

As Ryo is only 18 years old, he is a bit naive at times and does not have all the sensibilities of an adult. He can be blunt with his language, such as when he accidentally offends Fangmei Xun by telling her she has eyes that remind him of a cat.

In 1986 Yokosuka, Japan, the teenage martial artist Ryo Hazuki returns to his family dojo to witness a confrontation between his father Iwao and a Chinese man, Lan Di.