The three main characters are Terra, Aqua, and Ventus, a trio of close friends and apprentice Keyblade-wielders under Master Eraqus who aspire to become Masters themselves. Another Keyblade Master, Xehanort, and his mysterious apprentice, Vanitas, serve as the game's antagonists. Other characters from the previous games return, such as Sora, Riku, and Kairi, though they are younger than their original incarnations and given less prominent roles. A number of characters who later come to form Organization XIII also appear, particularly the first five apprentices of Ansem the Wise (Braig, Dilan, Even, Aeleus, and Ienzo) as well as Lea andIsa. As with the Heartless in Kingdom Hearts and the Nobodies in Kingdom Hearts II, Birth by Sleep introduces a new type of enemy: the Unversed, beings who oppose human life and feed off of negative emotions, created from those who are not well-versed in their own existences, and responsible for the uprising of Heartless and Nobodies in the other games.

As with the other games in the series, Birth by Sleep features an extensive cast of Disney characters. The most prominent of these characters is King Mickey, who serves as a student under Yen Sid at this point in the series chronology. Donald Duck and Goofy, who served the main protagonist Sora in most other games, appear in smaller roles. Most other Disney characters remain in their respective worlds regardless of their overall importance to the story in previous installments, such as Maleficent and Pete, who served as major antagonists between Kingdom Hearts and Kingdom Hearts II, and a number of the Princesses of Heart. Some characters (such as Experiment 626, Prince Phillip, and even King Mickey) occasionally fight alongside the player characters in battles as partners similar to the other games, providing assistance and performing combos to help the player proceed. However, they do not follow the player around constantly like Donald and Goofy in the other games. Unlike the other major installments, which also featured casts of ten to twenty characters throughout the Final Fantasyseries, Birth by Sleep only features two of these characters: Zack Fair from Final Fantasy VII, and Moogles, from several of the Final Fantasygames.