Dark Cloud is set within a fantastic world with two moons called Terra. The world is made of two main continents referred to as the East and West. The eastern continent has a focus on technology, and the civilization is advanced whereas the western continent is less so, and its people prefer to "live in harmony with nature".
On the western continent are settlements that were sealed away by the Fairy King during the attack by the Dark Genie and where the game primarily takes place; Norune, Matataki, Brownboo, Queens, Muska Lacka and a settlement on one of Terra's moons, Yellow Drops (Brownboo and Yellow Drops being unaffected).