Gameplay differs from traditional games in the Sonic series by mixing in the new element of swordplay with the traditional Sonic platforming and speed. Swordplay is implemented through the Wii Remote. Gameplay is heavily inspired from Sonic and the Secret Rings with many of the same abilities and restrictions shared exclusively between the two games. Unlike other 3D Sonic games, Sonic cannot turn around, and is funneled into a set path automatically, only able to strafe left and right, move and backflip in reverse, or keep running forward. Unlike Sonic and the Secret Rings, however, Sonic's movement is controlled with the analog stick, making forward and backward movement more streamlined.
The stages feature townspeople that cheer the player on, and some that Sonic can interact with; these actions and the player's deeds will be judged at the end of each stage, updating his "knight ranking" accordingly. By interacting with these characters the player may do a quick-time button input. Doing so correctly will take away twenty of Sonic's rings and give them to the townsperson, and in return, he receives a gift at the end of the stage. In some stages, it is required to give a specific amount of rings to townspeople before reaching the goal. In stages where this is not required the townsperson will reward Sonic with an item. There are 242 items in the game, some of which can be gained by opening treasure chests in the stages. Any items collected during a stage must be identified at the end of the stage by using Sonic's "ID points". Rarer items cost more ID points than others. An online mode allows treasures to be traded between registered friends.
The game changes the traditional level items, such as springs and speed pads, into "fairies." These fairies come in varying colors; Yellow elements will be used as a group of one to twenty rings, Blue fairies will be used as speed boosts and springs, and Red will be used to fill the "Soul gauge." This gauge is filled by defeating enemies and collecting Red Fairies, and is used to unleash a powerful lock-on attack, Soul Surge. On only the first few stages, the "pearls" from the previous game, Sonic and the Secret Rings, appear as apples.
The skill system from Sonic and the Secret Rings also returns, but has been revised into a more standard linear progression system, Each playable character has three styles to choose from. At first, only the balanced "Knight" style is available, but later, "Cavalier" and "Paladin" styles are unlocked. They deal with the aspects of speed and power, respectively. As levels are completed, the player gains a number of "Followers" that is used as Experience and as the number of followers goes up, the number of skills the player has in a certain style are permanently increased. The "styles" of characters beside Sonic are not increased; Rather, their swords' abilities and skills are enhanced.
Once the "Knight's Quest" part of the story is reached, Sir Gawain (Knuckles the Echidna), Sir Lancelot (Shadow the Hedgehog), and Sir Percival (Blaze the Cat) will be playable from that point on. Each has their own characteristics; for instance, Knuckles wields dual swords that double as boomerangs and has the ability to glide, Blaze can surround herself with fire and use more lunge attacks than Sonic, and Shadow can use Chaos Powers. In story mode, they can use different swords than their own swords, unlike Sonic, who can only wield Caliburn.
Up to four players can play in the game's multiplayer, choosing between one of 12 characters to partake in a number of different kinds of battles. Characters include Sonic, Lancelot (Shadow), Gawain (Knuckles), Percival (Blaze), Blacksmith (Tails), Lady of the Lake (Amy Rose), Galahad (Silver the Hedgehog), Lamorak (Jet the Hawk), regular Shadow, regular Knuckles, regular Blaze and King Arthur.
