The game follows Terry as he attempts to save his sister. Instead of fighting in battle, Terry is able to recruit monsters into his party. When fighting random battles, Terry can set out meat, which may coax the monster into joining the party at the end of the battle. Terry can also breed two monsters, combining them into a new, stronger monster. Excess monsters can be placed on the Farm, a storage place for monsters. They can be picked up or dropped off and there is an option to put monsters at the farm to sleep, which allows them to maintain their wilderness level, but not grow in level. There can be 19 awake and 19 asleep monsters at any one time. A monster's wilderness level lowers as Terry trains them, which makes them more likely to participate in battle. By leaving monsters at the farm awake, they become more wild.
Just like in most RPGs, monsters are able to gain experience points and level up after battles. Each monsters' requirements for experience points to level up varies, depending on their plus number or even what monster family they belong to. When they level up, they gain stats and sometimes skills. All monsters can carry a maximum of eight skills; if a monster can gain more than eight skills, players have the option of replacing old skills with new ones.
The player moves around to other worlds through warp gates which are located underneath the throne room. To access these gates, the player needs to defeat a certain class ranking. There are a certain number of areas in a world and at the last one, the player needs to defeat a boss. Some bosses in the game offer to join the player's party automatically, some have to be won over with meat, and some will not join at all. Other gates are hidden throughout Great Tree, such as one in the library that is only accessible after befriending over 100 different monsters.
In this game the player fights in the arena and goes through ranks that consists of three different battles that must be won before the player can advance to the next ranking. Each rank provides harder challenges: the higher the rank, the harder the monsters. The battles start at Rank G and go to Rank D. Later in the game players can go from Rank C to Rank A and then Rank S. These battles open up gates for the character to explore and are necessary to progress through the story.
Tiny Medals are scattered throughout different worlds randomly and are picked up by the player. A man collects these medals, who is later revealed to be the king of Great Tree, and will give certain monster eggs for how many the player gives to him. Also, Foreign Masters may appear while in other worlds. These encounters with other trainers can result in battle. There are different types of trainers that will give or do something for the player if they are defeated. These trainers' monsters may also join the player if they are given meat.
The game also comes compatible with the PlayStation's i-mode adaptor, allowing players to upload monsters from the game onto the mobile phone version of Dragon Quest Monsters.