The planet of Gaia, referred to simply as "the Planet" by its inhabitants, has three main continents. The planet is a living organism, and its lifeblood is the Lifestream, the liquid form being Mako, that wells in the substrata. Above the surface Mako crystallizes into Materia that allows its users to manipulate the powers of the planet in a phenomenon many call magic. Harvesting Mako as an energy source drains the planet of its life, and corrupts life forms, creating monsters in the wild.

The planet was once home to the Ancients, who called themselves the Cetra. The Cetra traveled the planet cultivating life wherever they went, and were said to be able to enter communion with the planet itself. At the end of their journey, legends tell, the Cetra entered the Promised Land, a place of supreme happiness.

The dominant faction of the world is the Shinra Electric Power Company, a powerful corporation that harvests Mako as an energy source. Shinra is seen as responsible for raising the quality of life for everyone in its sphere of influence. It has its own army, its special force being the SOLDIER, and is present in most parts of the planet. Shinra is opposed by a small terrorist organization known as AVALANCHE who seeks to stop Shinra from killing the planet by draining the Lifestream.

Shinra's base of operations is the metropolis of Midgar ringed by eight Mako Reactors that drain Mako for energy. While the upper city is an industrial powerhouse with a generally high quality of life, the lower city is made up of slums and receives little light and its air is polluted. The harvesting of Mako energy has made the area around Midgar a barren wasteland habited by monsters where flowers rarely grow.