Rally Challenge is a rally game featuring three vehicles: the Proton Wira, the Toyota Celica GT4 and the Subaru Impreza WRX. Gameplay is based on running a rally stage - a twisty section of road with snow, mud, asphalt or dirt. The player can choose to run a single stage, a "ghost race" against a previous run, or a championship season.

For the championship, you race all of the stages available against up to 9 other players - either human competitors or computer AI. As the races are done without any other cars on track, it is done by turn-by-turn. The game also offers a replay mode with the ability to save. Through a serial link or over a network, you can race against another human player.