From Mameruka, "The Land of the Free", hails Nick, the alter-ego of the once-popular yo-yo-wielding superhero Captain Rainbow. He has come to Minmin Island in order to regain his lost popularity. The island is known far and wide as the rumored place where your dreams can come true, and that has attracted a colorful cast of Nintendo's second-and-third tier, long lost and forgotten characters. With the likes of Birdo from Super Mario Bros. 2 USA, Little Mac from Punch-Out!!, Takamaru from Nazo no Murasamejou, Crazy Tracy from Link's Awakening, the soldiers from Famicom Wars, and much more roaming the island, trying to make their dreams come true, Nick has to decide whether to help them out or to use the power of the island and the stars to do what he came here for.
Captain Rainbow is divided into two parts: action and adventure.
In the adventure part, Nick has to help the islanders with their problems, such as helping an overgrown Little Mac regain his form, or helping the Famicom Wars soldiers train to win the volleyball gold medal. The goal is to obtain crystals, Kirarin, that are received from helping the islanders.
Once enough Kirarin have been obtained, a Star will fall and the action part begins. Nick will have to bring the star to an altar at the top of the island and use its power to grant wishes. He will be repeatedly challenged by a black shadow who wants to use the power of the star for itself.