Yu-Gi-Oh! GX begins with the lead character, Jaden Yuki, obtaining a card, "Winged Kuriboh", from Yugi Mutou, the renowned Duel Monsters champion. Yu-Gi-Oh! GX follows the exploits of Jaden and his companions as he attends Duel Academy (Duel Academia).

The Academy was created by Seto Kaiba on a remote island in the Southern Seas, with its dormitories named after the three Egyptian God Cards, and is run by Chancellor Sheppard (Samejima) and his staff. The most elaborate dormitory, Obelisk Blue (オベリスク・ブルー Oberisuku Burū), is named after "Obelisk the Tormentor". The Obelisk Blue dormitory can be graduated to, but the only way to enter the dorm in the first year is to attend and do well at an affiliated junior school (English version only). As the highest ranked dormitory, Obelisk Blue's facilities are of the highest quality, on the level of the world's classiest hotels and restaurants. The center dorm, Ra Yellow (ラー・イェロー Rā Ierō), is named after "The Winged Dragon of Ra". Those who were given the highest scores in the entrance exam, or who only did mediocrely in the junior school enter this dormitory, which, while not as extravagant as Obelisk Blue, still has incredibly clean and well-kept facilities and meals of a quality far above the lifestyle of the average salaryman. The lowest dorm, Slifer Red (Osiris Red) (オシリス・レッド Oshirisu Reddo), is named after "Slifer the Sky Dragon". Those who scored poorly are put into the shoddy dorms of Slifer Red. The naming choices reflect Kaiba's bias over the God Cards in relation to his rivalry with Yugi (Obelisk was Kaiba's own personal card in Battle City, while Slifer was Yugi's, with Ra smack in the middle as the most desirable card out of the three until Yugi received it at the end of the story arc).

For the first two years at Duel Academy, the main cast faces major threats including the Shadow Riders (Seven Stars), who intend to revive the Sacred Beasts by creating a strong dueling presence on the island, as well as the Society of Light, which intends to enslave humanity with the mind control satellite of Misgarth, while the aim is to destroy the world with the satellite in the original version. As a result of Professor Viper's interference, Duel Academy is transported to another world, a desert plane with three suns and resident Duel Monster spirits during the third year–right into the hands of Yubel. Upon returning home, Jaden and a select group of his partners dive into the rift left in their escape to recover their missing companions, and embark through second and third worlds where losing a duel is fatal. In their fourth year, the characters largely reflect upon their upcoming graduation and what to do afterwards, such as Alexis considering becoming a teacher, and Syrus taking up his brother's legacy as a Cyber-style duelist. A villain named Trueman also appears and is somehow connected to Atticus and the abandoned dormitory. Later it is shown that Trueman was being controlled by a dark force called Nightshroud, previously a secondary antagonist from the first season