Story
The player characters receive a letter from a dying man who informs them that, during a celebration of your defeat of the evil wizard Mangar, his true master—the Mad God Tarjan—arrived and unleashed foul creatures which destroyed the town of Skara Brae. The box cover states it thus:
Skara Brae is in ruins. Roscoe's Energy Emporium stands vacant. The Equipment Shoppe went under so quickly Garth was crushed. Your Bard hasn't stopped whimpering since he realized all the taverns were closed.... Someone—or some thing—has sealed the city's fate with an evil so vast, so unspeakable, that a host of Paladins and an army of Archmages are out-matched. Hard times call for subtlety. Smaller is better. Sneakier is better. What the world needs now is a thief. The Thief of Fate.
The game begins in a refugee camp outside the ruined Skara Brae, which replaces the now-destroyed adventurer's guild from the previous games. Besides the city ruins, the wilderness features a temple for healing, a tavern, and a number of special locations from where the party will embark on missions to other worlds over the course of their quest.
Skara Brae was scaled down considerably, though its layout remains recognizable. The ruins are 16x16 map tiles (instead of the city's 30x30 layout from The Bard's Tale I). In the ruins of the Review Board, an old man—the sole survivor—directs the party to first kill one Brilhasti ap Tarj, a servant of the mad god Tarjan, in the "Mad God" dungeon below Skara Brae - a startup quest for the characters to attain power which can be ignored if powerful characters were carried over from previous games. Next, the old man orders the party to retrieve artifacts from several other worlds, sending them from one world to the next upon completing a quest. He also teaches the group the chronomancer spells to get there and back. Ultimately, the old man dies, but not before sending the party to the mad god Tarjan's domain. From this point onwards, characters cannot level up in Skara Brae, but need to go to a Review Board in one of the Dimensions. With the items retrieved on their previous quests, the party can navigate Malefia, the final world, and confront and vanquish Tarjan himself. It is generally held that only a character of the thief or rogue class can kill Tarjan, by using their special combat ability to sneak up on an opponent from behind, hence the game's subtitle "Thief of Fate".
With Tarjan defeated, the ending pans back into a tavern where a Bard brings the story full circle to the beginning of The Bard's Tale I, and it is revealed that the player party took the places of the deities Tarjan killed, becoming a set of new stars in the sky.
Read more about this topic: The Bard's Tale III: Thief Of Fate
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—Kathleen Norris (b. 1947)