X-Out is a horizontally scrolling shoot-em-up with eight levels and an underwater setting.

Between levels, the player visits a shop and use their game score to purchase new submarines and equipment. The submarines come in four different variants, and additional purchases act as additional "lives". Each can be equipped with a one-way, two-way or three-way fire weapon of increasing power (and thus cost). Secondary weapons include sonic waves, powershots and target-seeking missiles. The player can also purchase auxiliary satellites and specify their movement pattern, which can be circular orbits, vertical and horizontal movements, or an intercepting action.