Up to three players, as the Battletoads, brawl aliens and mutant rodents through six levels to save the universe from the Dark Queen. The game also includes vertical and bonus levels. Each Toad has its own signature attack, and as customary for the series, players can knock enemies towards the screen, breaking the fourth wall.

Rare took greater liberties with violence and gore in Battletoads Arcade since the product was not destined for home consoles. It was Rare's first game to use the 3D graphics technology that was implemented in Donkey Kong Country and Killer Instinct. Although the game playtested well and appeared financially viable, the publisher hesitated to release the game. A port for the Super Nintendo was in production but canceled. The game received its console debut when it was emulated in the 2015 Rare Replay, a compilation of games from Rare's history for the Xbox One.