The European/Australian Master System port of "Rainbow Islands" contains a bug that crashes the game after Level 7, sending the player back to the title screen. If the level select code is used to access Level 8, the same glitch occurs at the end of that level completely preventing the player from seeing the ending. The Brazilian version has fixed this bug.

The basic premise of the game is that each level is an island which is slowly sinking into the sea. The player must therefore get to the top of each level, by jumping on platforms and making use of the game's most distinctive feature: the ability to produce solid rainbows, which are used both as platforms to stand on, and as a weapon.