Nancy Drew returns home to River Heights to compete in the Clues Challenge with her boyfriend Ned Nickerson and her friends Bess Marvin, George Fayne. But when Nancy follows a lead to the old Town Hall, it catches fire and burns to the ground, leaving Nancy as the prime suspect for arson. With Nancy stuck in jail, Ned, Bess, and George must help prove Nancy innocent and catch the real culprit.
In the Nancy Drew series, players have control over the characters' movements and dialogue, through clickable areas and programmed speech sequences. In most games in the series, Nancy Drew is the only playable character. Alibi in Ashes will have more playable characters than any other of the previous games with a total of four.
- Nancy Drew: Nancy is an American amateur detective from the fictional town of River Heights. She is the prime suspect in the town hall arson case, despite her claim of innocence. Though under arrest, she has access to the police equipment to prove her innocence from the police station.
- Ned Nickerson: Ned is Nancy's handsome, loyal boyfriend. He does anything he can to prove Nancy's innocence. Though Ned is a prominent character in the book series, this is the first time he will appear in person, rather than a phone character, in the game series. He has special luck with charming Deirdre Shannon.
- Bess Marvin: Bess is one of Nancy's best friends and George's cousin. Despite her high-strung nature, Bess uses her beauty and charms to help prove Nancy is innocent. She is particularly helpful with Toni Scallari, but does not do well with Alexei Markovic.
- George Fayne: George is one of Nancy's best friends and Bess's cousin. Though rather cynical and sensible, George's knowledge of technology and her desire to help Nancy come into use to finding the real criminal behind the arson. Her family takes care of Nancy's dog Togo while Nancy's imprisoned.
- Chief McGinnis: Chief McGinnis is the gruff head of the local police department and has worked with Nancy on cases many times before. He doesn't quite believe Nancy is guilty, but he is pressured to take her into custody with the evidence surrounding her. McGinnis is willing to let Nancy work on proving her innocence while being held at the police station.
- Brenda Carlton: Brenda Carlton considers herself an ace television reporter for Heights Nine News. She loves a good news story, to the point of twisting what people say and focusing on sensationalism rather than accuracy, regardless of the cost to others. Could she have set the fire to create a dramatic, newsworthy story?
- Deirdre Shannon: A longtime rival of Nancy's, Deirdre is a spoiled rich girl whose family is constantly being bested by the Drews, and the Clues Challenge is proving to be no different. She is competitive, haughty, and arrogant, though she has a soft spot for Nancy's boyfriend, Ned Nickerson. She and George absolutely detest each other. Constantly compared to "perfect" Nancy, she's tired of placing second. How far will she go to top Nancy in this competition?
- Alexei Markovic: A former amateur detective, Alexei is now an eccentric recluse after one of his cases went wrong and ruined his reputation. He currently owns an antique shop in River Heights and does not appreciate it when people break his merchandise. With his knowledge of the town and its history, how far would Alexei go to try to clear his name?
- Antonia "Toni" Scallari: Toni stays busy as an elected official on the River Heights City Council, but keeps in touch with her voters by running the local ice cream parlor, Scoop. Toni holds great sway in the community, and appears to be approachable and pleasant, especially to her favorite customer Bess. Is this practiced politician's friendly façade covering up darker secrets?