Demon Attack is set on a planetary surface in space[a], when strange winged creature float above threatening the player and attack, leading the player controlling a laser cannon to retaliate by shooting at them. The player starts with three lives, called bunkers in the game, which are displayed at the bottom of the screen. Each time you are hit by enemy fire, you lose a bunker, the game ends when all bunkers are depleted.[5] The waves of enemies grow more complex as the game progresses, with wave five having enemies divide into two smaller enemies after being shot.[7] Later waves feature enemies who will dive towards the laser canon.[8]
The player can move left and right to avoid enemies from the bottom of the screen. The game offers different modes of play, including a Tracer Shot mode, which allows the player to guide the laser after they are shot. Two-player games can either be played competitively against each other or as a co-op mode.[8] In the co-op mode, the two players alternate every four seconds on who controls moving and firing the ship's laser.[8][5][7]
In the Intellivision version, the demon flagship named Pandemonium appears after three waves of enemies are defeated. Pandemonium is a large ship that must be destroyed by eroding its shield with lasers shots and aiming for a small rotating wheel of vulnerability.[6]