Unlike the previous games in the Zork franchise, which were text adventures, Return to Zork takes place from a first-person perspective and makes use of video-captured actors as well as detailed graphics; a point-and-click interface replaced the text parserfor the first time in a Zork game.

The player's character is a sweepstakes winner who wins an all expenses paid holiday to the Valley of the Sparrows, in Zork. Upon arrival, however, the player quickly learns that the entire area has fallen under some dark and sinister influence, becoming decayed and dysfunctional. Whole buildings have mysteriously vanished, murderous vultures infest the land, people have frequent and disturbing nightmares featuring some dark being which refers to itself as Morphius, and many of those who have survived have become reclusive and paranoid. The player must survive countless perils whilst exploring the valley, investigating the causes of the powers that have gripped the land and ultimately putting a stop to them.

Return to Zork is set in the year 1647 GUE, later than any other game in the fictitious history of Zork, including those made after it. Even the relevant backstory postdates all other games, beginning with the Great Diffusion in 1247 GUE. The sweepstakes letter included with the game implies that the events of earlier games and even the Great Diffusion, to a degree, had come to be regarded as mere mythology by this time, and touts exploration of recently discovered ruins of the Great Underground Empire as one of the holiday attractions.