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Alignment is a characteristic of a town type and its associated heroes and creatures. Heroes and creatures have the same alignment as the towns they are associated with, not the towns in which they are hired. There are three town alignments in Heroes of Might and Magic III: good, evil and neutral.

Good towns are:

Evil towns are:

Neutral towns are:

Alignment has almost no direct impact on the gameplay, and it is mostly used in the game storyline. In Restoration of Erathia the only things alignment affects are Morale and Altar of Sacrifice, which allows heroes with good alignment to sacrifice artifacts for experience, evil alignment heroes to sacrifice creatures and neutral alignment heroes to sacrifice either one of their choosing. Another effect of alignment was introduced in Shadow of Death expansion, where Angelic Alliance, a combination artifact, allows hero to have creatures from good and neutral towns without causing them to suffer from morale penalty. Additionally, Shadow of Death introduces magical terrains Clover Field, Holy Ground and Evil Fog, which affects the morale depending on the alignment of the creatures.

In terms of Morale deficits for having creatures of different alignments, each town is considered its own alignment (i.e. having Castle, Rampart and Tower troops will result in -1 morale) and Neutral creatures count as their own town.