Backyard Basketball offers two primary modes of gameplay: Single Game, which allows the player to select a team to compete against a computer-controlled team, and Season Play, which allows the player to select a team to compete against a series of computer-controlled teams over an 18-game season, including two best-of-three playoff series and a best-of-five championship series should the player achieve a large number of victories. The Single Game mode also allows the player to compete against a second player or to practice using a single character.
Before games can occur, the player has the option to modify a variety of settings. These include court selection, A.I. difficulty (easy, medium, or hard), the presence of certain rules (fouls, fatigue, violations, shot control, and power-ups), sound options (game music, background sounds, and in-game dialogue), controls, and team names. Team modification also involves the customization of jerseys.
The game's controls are set to mouse usage by default, capitalizing on a point & click style of gameplay to move characters around. The game is also compatible with keyboards and game pads.
The selection of team members follows one of two settings: First Five Picks, which allows each player to select their team members freely, or Full Draft, which forces each player to select their team members one at a time in an alternating fashion. Each potential team member, including younger versions of Kevin Garnett and Lisa Leslie, is ranked according to five statistics operating on a 1 to 10 scale. These include Inside Shooting (the relative accuracy of the character's shot from inside the three-point line), Outside Shooting (the relative accuracy of the character's shot from beyond the three-point line), Ballhandling (the relative likelihood that the character will not have the ball stolen or blocked on offense), Defense (the relative likelihood that the character will be able to steal or block the ball on defense), and Quickness (the relative speed at which the character moves along the court). Players also have the option to customize rookie characters with either manually chosen or randomly allocated statistics, as well as heights, skin tones, shooting hands, birthdays, and names. Although rookie characters generally have lower overall statistics compared to pre-rendered players, they have the additional ability to increase all of their statistics by three levels should the player's team make the playoffs in Season Play.
Gameplay in Backyard Basketball is set to a point & click control scheme by default. With three characters on the court at one time, the player clicks at various locations on the court to guide the character with the ball to that location. Clicking on a teammate causes the character to pass the ball to that teammate while clicking the basket (indicated by a basketball icon) causes the character to attempt a shot. If shot control is on, then players have the option to make the shooting character pump fake by clicking rapidly, finally shooting the ball when the click is held down. If shot control is off, then the character will automatically release the shot once the basketball icon is clicked. On defense, the player can switch between characters to control by clicking on them as they run about, guiding the chosen character by clicking the location on the court where he or she should go. If an opposing character is clicked when an 'X' symbol hovers by them, the character nearest him or her will attempt to steal the ball. If a pair of hands appears near the basket when an opposing character goes to shoot the ball, the nearest character will attempt to block the shot or rebound the ball.