In Little Nemo: The Dream Master, the player controls Nemo as he proceeds through side-scrolling, 2D levels. In each level, Nemo must collect a specific number of keys, which are generally scattered throughout the rather large levels. The number of keys needed to beat each level is not indicated to the player until reaching the exit at the end of the level, which has a corresponding number of locks. The player must proceed through each level, typically left to right but also up and down, searching for keys.
Throughout each level the player encounters several animals, which, after being fed, will allow Nemo to use their powers. A similar game mechanic would be used in Kirby's Adventure three years later. Using the powers of some animals is necessary, while others simply make things a little easier. The animal's life-bars often differ from Nemo's, with some animals possessing extra health bars. Such abilities are vital, as many challenging obstacles exist throughout the game, and enemies are virtually almost infinite. As such, Little Nemo is generally regarded as a highly difficult game.