The story is about a 9-year-old boy named Wataru Ikusabe (戦部 ワタル, Ikusabe Wataru?) who is magically transported to a magical realm by a dragon. This realm is called Soukaizan (創界山, Sōkaizan?), which he is supposed to save from an evil, demonic ruler.

The series incorporates many elements of RPG games including dungeon levels and quests for mystical objects. Soukaizan itself is represented as a series of tiered platforms each floating above the one beneath it in a rough pyramid shape. In order to progress to the next tier where he will meet the series' ultimate villain, the show's heroes must complete some task on the one beneath. In addition to these, he has to defeat the ruler of each level along with his many henchmen. Each level he completes, rejuvenates one color of the gray rainbow over Soukaizan.

In his quest to save the realm, Wataru manages to transform a clay sculpture into a somewhat autonomous and small Super Robot. He also befriends many of the Soukaizan natives, and forms some very strong friendship bonds. The term Sou-kai-zan can be broken down to its three parts: "Sou" (creation), "Kai" (realm, space, world, or universe), and "Zan" (hill or mountain), representing the pyramid shape of the world's level.