Sonic and the Black Knightis the second entry in the Sonic Storybook series that began with Sonic and the Secret Rings. Wizard Merlia, grand-daughter of the great Merlin, summons Sonic to the mystical realm of King Arthur that is in grave danger. Arthur has been transformed into The Black Knight by an evil power emanating from Excalibur's scabbard and is a tyrant. Only Sonic is capable of wielding the great magic sword Caliburn and saving the kingdom by breaking Arthur's curse. As the story progresses you have to fight Arthur's knights and meet and battle several familiar faces from the franchise with story specific names.

Game modes include:

• Adventure mode: the main gameplay mode in which the player plays the game and progress the story. This include cut scenes used to progress the tale and describe the next objectives, mission selection, of which there are five types, as well as a blacksmiths where Sonic can change from combat style for the different types of mission. Upgradable attacks and power moves become available as players characters progress and level up;
• Ranking mode: the game allows up to twenty friends to exchange Friend Codes after which they will appear on each other’s Friend Rosters and Friend Rankings;
• Treasury mode: where items from the Adventure mode can be sent to other players on the Friends Roster, requires a Wi-Fi connection;
• Gallery mode: this is where screen grabs, and unlocked features such as illustrations, movies, books, background music, banners and voice-overs can be accessed.

When playing in multiplayer up to four players can fight each other, choosing from a roster of twelve characters many of whom mirror characters from previous Sonic games. These are Sonic, Lancelot (similar to Shadow), Gawain (similar to Knuckles), Percival (similar to Blaze), Blacksmith (similar to Tails), Galahad (similar to Silver), Lamorack (similar to Jet), King Arthur, Shadow, Knuckles, Blaze and Amy.