Direction input data and inertial sensor data are acquired from a controller including a direction input section and an inertial sensor. Movement of a player character is controlled on the basis of the direction input data. In addition, a control mode for a position of a cursor is switchable between a first control mode and a second control mode. When the control mode is the first control mode, a position further shifted, based on the inertial sensor data, from a position calculated based on a position and a direction of the player character is set as the position of the cursor. When the control mode is the second control mode, a position shifted, based on the inertial sensor data, within a predetermined range, in a virtual space, including a predetermined position in the virtual space, from the predetermined position is set as the position of the cursor.