Lost Odyssey uses a traditional turn-based battle system seen in most Japanese role-playing games, similar to early Final Fantasy iterations. A world map allows the player to move the party between adjacent towns or fields on the map, while later in the game the player is given more freedom to explore the world through the use of ocean-going ships. Towns and cities provide inns for the player to recover the party's health, stores for buying and selling of equipment, and save points for the game. While exploring certain areas, the player will randomly encounter monsters to fight.
The combat system incorporates aspects of battle initiative and length of actions to determine how events resolve each turn. Item usage is instantaneous, regular melee attacks are executed on the same turn, while casting spells or using special abilities may delay the player's action for one or more turns, depending on their speed. Actions can be delayed if the user is hit by an attack. The player has the option to cancel an action on a subsequent turn if necessary.
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