Shenmue has one of the most intricate plots in video game history, which has been left deliberately vague in places to allow the player to guess at the outcome of certain events. This might not be entirely accurate as I have a very basic understanding of Japanese and may have missed some small points. The section on characters has now been updated to include the character's English names and more accurate character descriptions.
The plot focuses on a young man from a small town called Yokosuka in the winter 1986 called Ryo Hazuki. Ryo's father, who ran a martial arts dojo, is assassinated by a ninja and mob boss called Souryu over a mysterious 'mirror'. Ryo embarks on an epic quest which could span as many as 5 parts. There are many key characters such as Shenhua Rei, Chai, Chin Taijin (aka 'Chin'), Kishou, Harasaki, Tomo, and Mark.
Having finished part 1, played the Shenmue demo to death, and watched the Tokyo Game Show and promotional videos hundreds of times, it's obvious that Shenmue's characterisation shines. From the reggae-dancing, dreadlocked Tomo-san, to the agile old man Chai, to the slightly-mad Goro-san, to Ryo himself, every person has their own distinct character. Even the 500+ NPCs (Non-Player-Characters) are different enough to have very distinct personalities and personal agendas.
Iwao Hazuki: The strict father of Ryo. Iwao was an expert in the Hazuki family martial arts. He raised Ryo from childhood,as well as his only apprentice, Masayuki Fukuhara. He died at the hands of the evil Souryu.
Ryo Hazuki: Ryo is the main character of Shenmue. Ever since losing his mother at the young age of 3, Ryo has been brought up by his father Iwao Hazuki. Now he is at the age of 18, and in his third year of high school. Ryo is skilled in the Hazuki martial arts as he has trained under the tutelege of his father his entire life, Iwao was killed by Souryu. Now Ryo is on a quest to find out why his father died.
Masayuki Fukuhara: Masayuki was Iwao's only apprentice since he was 15. Now since Iwao's death he continues training in the Hazuki Dojo, often consulting with Ryo, and Ine.
Ine Hayata: A quiet and gentle lady whom handles all the household duties for the Hazuki household. She now after Iwao's death continues her household duties, as well as taking care of young Ryo.
Nozomi Harasaki: She has recently returned from Vancouver, Canada from a trip to visit her parents, Harasaki is both a classmate and close friend of Ryo's. She currently works along with her grandmother at a Flower shop. Soon She will be much more than a friend to Ryo.
Chai: A constant shadowy figure whom follows Ryo around on his quest. He lurks in the dark, and looks like a beast. His personal history is yet unknown, much like the evil Souryu.
Chin Taijin: Chin is an old chinese man, whom seems to be a very important person. He knows very much about the mysterous poenix mirror,and has a personal bodygaurd named Shou.
Tomo-san: Tom is a reggae dancing, Hot Dog stand owner. Tom is from America, but speaks in a broken Japanese/English mixture. He often helps his out his new friend Ryo Hazuki. His girlfriend/wife can be seen at night by the hot dog stand.
Mark Kimberly: Mark works at the Yokosuka Harbour, as a fork-lift driver. He helps Ryo with his future job, as well as consulting with him. Mark often speaks in a Japanese/English Mixture.
Ojii-san: A once master of the martial arts, he now Lives at Yokosuka Harbor, as a homeless man. He helps Ryo out while he is in the Warehouse District.
Souryu (Cang Long in the US): The villian of the Shenmue saga, not much is known about him yet. We do know that he killed Iwao Hazuki, father of Ryo. We also know that Iwao, and a death of a man named Chosonmei who died in Mouson, and that Iwao was shocked upon Souryu's question to Iwao, on if Iwao remembered who Chosonmei was.
Shenhua Rei (Ling Sha Hua in the US): This young woman seems like a 'child of nature'. Throughout Chapter 1 Ryo dreams about her and in videos of Chapter 2 she and Ryo are talking around a fire, so it seems that she lives near Hong Kong and has some kind of psychic connection with Ryo.
You can check out pictures of most of the characters on Shenmue.com
