It is the Year of the Dragon and prophecy tells of a rare purple dragon egg that will be born every ten generations. The dragon would change the fate of history when born. Ignitus, one of the four Dragon Guardians, watches over one such egg.
The dragons are at war with Malefor, who knows of the prophecy and attacks the temple to destroy the purple egg. Ignitus is able to escape with the egg, letting it float downriver as he distracts the enemies forces. The egg is discovered by a dragonfly family and when Spyro hatches he is adopted by them.
Spyro grows up thinking he is a dragonfly until one day, Sparx and himself are attacked and he learns he can breathe fire. Wanting to search for his true home, Spyro begins his journey. Sparx reluctantly goes with him. Soon Spyro meets up with Ignitus, and though he is happy Spyro survived, he is worried they have already lost the war. Cynder, a full grown black dragon, has forces occupying the Dragon Temple.
Traveling to the Temple, Spyro drives the army away. Ignitus tells him about the war and Spyro sets off to free the other three Dragon Guardians. Spyro learns as he begins to find the other elder dragons that Cynder is merely a pawn, being controlled by Malefor. Spyro is attacked by Cynder as he frees Terrador. Ignitus comes to his rescue, only to be captured himself.
Spyro finds Cynder draining Ignitus' power to open the realm of Malefor. He pursues her, eventually using all of his power to purge her of Malefor's influence. She is returned to her true form, a young black dragon just like Spyro. They are both able to barely escape and Malefor is still alive. The war is not over, the story continues in The Legend of Spyro: The Eternal Night.
On September 8, 2008, The Legend of Spyro: A New Beginning became available on the Xbox 360's Xbox Originals service for 1200 Microsoft Points.