It centers around a young man named Ryo Hazuki (pronounced correctly by Japanese people as Rēo), who returns home one day to find a man and some thugs beating up his father and asking him about a mirror. The man kills his father, and Ryo embarks on an epic quest for revenge and to discover why his father was killed. Shenmue is based in and around Yokosuka, Japan, in 1986, while its sequel (Shenmue II, 2001) is based in 1987 in Hong Kong and Guilin, China.
Gameplay is diverse; while most of the game proper is spent walking around the atmospheric, lifelike locations in a third-person 'chase cam' mode, talking to people, searching for things, solving puzzles, and so forth, this is interspersed with dozens of 'mini-games', including forklift and motorcycle races, bar fights, chases down crowded alleys, full versions of Sega arcade games Space Harrier and Hang On, and last but not least, the 'free fighting' sequences.
The free fights put Ryo against one or more enemies in a cross between Virtua Fighter and Final Fight; Ryo has a large list of karate techniques, almost worthy of a full one-on-one fighter, but he fights many enemies at once instead of just one. The culmination of the game involves a gigantic brawl between Ryo, a friend, and almost a hundred enemies.
Shenmue was called "Virtua Fighter RPG" while in early development, and this is reflected not only in the VF-like fights and RPG elements, but in the variety of toys and posters relating to that game that Ryo finds.
It is notable for entering the Guinness Book of Records as the most expensive video game ever developed ($40-60 million).
Shenmue III has been confirmed and is now in development. This is scheduled to be the last game in the series.