The game plays almost identically to Mortal Kombat, with numerous improvements. There are several changes in standard moves: a crouching punch was added, low and high kicks have greater differentiation, roundhouse kicks are made more powerful (now knocking opponents across the screen, like the uppercut), and it is easier to perform combos due to reduced recovery times for attacks. Returning characters also gained new special moves, including some to be used in midair, and the game plays almost twice as fast as the original. The game is completely uncensored from the start, so no code is needed to uncensor the game.
As with its predecessor, matches are divided into rounds, and the first player to win two rounds by fully depleting their opponent's life bar is the winner; at this point, the losing character becomes dazed and the winner has a short amount of time to perform a finishing move. All characters share the same basic attacks, such as uppercuts, foot sweeps, and throws, although these moves vary in speed and power from character and character. When using a three-button controller, not all of these moves are available. Characters are differentiated by several special moves that can be performed by entering certain button combinations.
The single-player game consists of a series of fights against the other playable characters of the game, before moving onto one of two secret characters if certain conditions are met. From there, the player battles the shapeshifting sorcerer Shang Tsung and the monstrous Kintaro before fighting the game's final boss, Shao Kahn. There are five difficulty settings for computer-controlled opponents (Very Easy, Easy, Medium, Hard, and Very Hard), and players can change the number of starting credits in the options. A second player can challenge the first by pressing  START  during gameplay, with the winner continuing in the tournament. The game lacks the "Test Your Might" bonus games and point system from the first game, in favor of a consecutive win tally where wins are represented by icons.