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While somewhat canon, the plot deviates from the original story line: Mankind find themselves at a financially and technologically peaceful state between the constant conflict against the Bydo Empire. A space project called Project Paradise that had been held back for a long time was finally seeing light. The project involved the construction of an artificial terrestrial planet called Eden as a possible Human retreat. However, after the construction and functioning of the planet, Major - the bio-computer system responsible for maintaining Eden - malfunctions, takes control of the planet's defenses and attacks mankind. It is now up to the recently developed R-9 variations, the Leo, to fly in and stop Major's assault on its creators.
Released only in arcades, R-Type Leo deviates from the normal R-Type style by removing the use of both the Force and the Wave Cannon. The new weapons are Force Bits (later identified in R-Type Final as "Psy Bits") which carry similar firepower to the main ship. The ship weapons are:
- Red - Claw Laser - a powerful horizontal laser beam
- Blue - Mirror Laser - fires multiple, ricocheting lasers.
- Green - Search Laser LRG - fires semi-homing lasers that can bend at 90° angles.
Unlike previous Bit Devices, the Psy Bits are capable of firing forward or backwards (the direction is controlled by movement of the ship itself). Finally, the Wave Cannon is replaced by a "Bit Shot", where the Psy Bits detach from the ship and collide with the nearest enemy at high velocity. The Bits can only do this for so long before running out of energy, and must be recalled to the ship to recharge.
The R-Type timeline indicates that the events of R-Type Leo occur before those of all the other games in the series. This could explain why the game lacks a Force, as this is a relatively new invention in R-Type.
R-Type Final has a ship called the R9Leo Leo, which can use the Psy Bits and has a Force (the Leo Force) which has the same weapons as the ship in this game.