On a quiet day like any other, a young girl named Ellen receives a letter from someone who is claiming to be her mother. The letter asks of Ellen to come to a little sea side hamlet by the name of Doolin in order to reunite her with her mother. The problem is her mother died when Ellen was only 5 years old. At the same time a reporter, Keats, working for an occult magazine named Unknown Realms gets a call from a lady begging for help and saying that someone is trying to kill her. Soon he and Ellen find themselves in a murder mystery, where the answers seem to only be found in the Netherworld, the Land of the Dead, a realm that can only be accessed from one place in the world, Doolin. So both these two unsuspecting people end up in a mystery that is somehow connects them to each other... How remains to be seen.
There are multiple realms to the Netherworld with places that are equivalent of Heaven to humans and places that are equivalent to Hell. There are ones that are more odd however, such as a realm that holds the memories of the dead, and a endless corridor that symbolizes humans lust for knowledge. Seven realms in total, all representing a certain aspect of the human mind. Ellen and Keates access these unique realms and and are met up with creatures called Folks, which try to hinder them from there path. Once you weaken a Folk something called an ID (a Folks soul) appears and by holding R1 and yanking your Sixaxis controller upwards you can add it to your inventory. Once added to your inventory you can assign these Folks to any one of the faceplates in order to use them to do your fighting. Different Folks have different attack types, such as Water, Fire, Wind etc. There are over 100 unique Folks in the game. Folks can be upgraded by predefined criteria. Some are upgraded by simply collecting enough of the same ID type, or defeating a certain number of enemies with the Folk, while others require a certain number of items, such as nuts or berries, to be collected and then used. Upgrading a Folk has different visual effects depending on the Folk in question or the character that is wielding it, but all upgrades will essentially increase the damage dealt by the Folk in question.
Each realm of the Netherworld features a very powerful folk as an end-level boss called a Folklore. The Folklore are usually weakened by specific attack types. Once they are weakened to a certain point their own ID will appear, which must then be absorbed in order to defeat it. However, unlike normal Folk IDs, the Folklore IDs will require different Sixaxis gestures, indicated by the colour the ID is glowing. Theses gestures include balancing the ID to remain in the centre of the screen, shaking the ID up and down, flicking the ID upwards at certain weak points and bashing the id from side to side. Once the ID is weakened enough, the player is able to capture it by flicking the Sixaxis upwards.
The game is split between the two main characters Ellen and Keats. Each character has a different perspective on the story, and while each character's story is linear, the player is free to progress either of them independently up until the final chapter. Before proceeding to the final chapter, both characters stories must be completed. The final chapter is then played out as both characters alternately.
Ellen and Keats have differing ways of using their Folks. Ellen seemingly 'summons' the Folk which will appear infront of her, perform their attack and then disappear, while Keats will have an image of the Folk appear from him while he does a gesture of their attack.
Folklore was announced at E3 2006 and was said to be "The next generation of dark fantasy." It was to be developed by Game Republic, under Yoshiki Okamoto, a video game designer who worked on many popular games, including the famed Resident Evil. The game was originally titled "Unknown Realms" before being renamed to "Folklore". The original name, however, still has a presence in the game, as it is the name of the magazine that Keats writes for.
A playable demo was first released on the Japanese PlayStation Network on May 30th, 2007. The demo features the two playable characters Keats and Ellen, with the ability to choose either of them. The demo includes a series of short comic-style cutscenes, exploration of a sea-side village and a trek through a series of playable areas where the players were introduced to the gameplay basics like how to go about fighting, acquiring new ID's and so on. The game however did not appear on the North American Playstation Network until three months later on August 23, 2007. The game was released October 9th, 2007 in North America.