The game takes place in 1995, 15 years before the events of Ace Combat 5: The Unsung War, revolving around the conflict between the nation of Belka and the Allied Forces; a multinational military alliance with forces from the nations of Osea, Yuktobania, Ustio, and Sapin among others. Several characters from Ace Combat 5 make an appearance in Ace Combat Zero, but they appear in tertiary roles. The player plays as a mercenary pilot, callsign "Cipher", hired by the country of Ustio, which was invaded by Belka.
The game features primarily older versions of fighter aircraft seen in its predecessor game, such as F-15C, F/A-18C, and several second and third generation fighters like the Saab 35 Draken. The player will go up against enemy ace squadrons who feature enhanced weaponry and combat prowess. Players who destroy everything without regard to hostility will receive the Mercenary rank, players who instead spare neutral targets will receive the Knight rank, and those that strike a balance between the two will earn the Soldier rank. These ranks will affect which enemy ace squadrons a player will face throughout the campaign. A split-screen versus mode is included with the game, but no online feature exists. A notable, if unfortunate, difference with previous and following game of the series is that the player does not have the ability to choose the aircraft his wingman will be flying, but is able to choose his SP weapon.
The game contains many references to the Arthurian legend, in the form of aircraft, weapons, structures and locations.