The central quests of Morrowind concern the evil Dagoth Ur, housed within the volcanic Red Mountain. Dagoth has used the Heart of Lorkhan, a large, heart-like artifact of great power, to make himself immortal, and now seeks to drive the Imperial occupiers from Morrowind using his network of spies, as well as an enormous golem, powered by the Heart of Lorkhan, a dwarven artifact the lord had originally been tasked to guard. In his stratagem for power, he blights the land of Vvardenfell and corrupts the minds of the weak by sending them dreams

The player begins fresh off a boat from the mainland in a town called Seyda Neen, freed from imprisonment by the string pulling of a distant and obscure emperor. At this point the player is under no obligation to follow through with the main quest, and may instead choose to take part in regional politics, to explore or adventure, or to pursue minor side quests. As with previous entries in the series, a particular emphasis in the design and execution of the game lays upon the freedom of the player.

The plot soon reveals that the player is possibly the "Nerevarine", the re-incarnation of Nerevar, an ancient Dunmer hero. As the player moves through the main storyline, he/she begins to take on characteristics of the Nerevarine, all the while learning more of the tumultuous past of Vivec, Nerevar, and Dagoth Ur. The third test is to find the Moon-and-Star, the ring worn by Nerevar, which would instantly kill any other. The player finds the ring; after receiving the support and being declared "Hortator" of the Great Houses and "Nerevarine" of the nomadic Ashlander tribes, the player comes to be officially called "Nerevarine" by the "Tribunal Temple", who normally persecute anyone who claims to be the "Nerevarine" and sentence them to death.

Thereafter, the player plots an assault on Dagoth Ur with the help of Vivec, one of the three living peoples that was able to partially resist corruption when they used the Heart of Lorkhan, who presents the player with the artifact gauntlet Wraithguard. He then tasks the player to recover the artifacts Sunder and Keening, the implements necessary to destroy the Heart of Lorkhan. Now facing Lord Dagoth, the player breaks the Heart of Lorkhan with Kagrenac's tools, destroying the source of Dagoth's power and killing Dagoth Ur in the process. Red Mountain is cleared of blight, House Dagoth falls, and the player is congratulated for his/her efforts by the Daedric Lord Azura.