The gameplay for Ghouls n' Ghosts is eerily similar to that of Ghosts 'n Goblins. The player controls the knight Arthur, who must advance through a series of spooky levels and defeat a number of undead and demonic creatures in his quest to restore souls stolen by Lucifer, including the soul of his bride, Princess Guinevere. Along the way, Arthur can pick up a variety of weapons and armor to help him in his quest.
While the core gameplay remains the same as its predecessor, there are a few extra abilities granted to Arthur, aside from the abilities to jump and fire weapons. By holding up on the joystick while firing a weapon, Arthur will throw the weapon straight into the air, which is very handy for attacking airborne enemies such as Red Arremer. Similarly, when jumping, Arthur can throw his weapon downwards by holding down on the joystick.
By jumping in certain spots, Arthur can cause a treasure chest to erupt from the ground. By firing his weapon at the chest, Arthur may find new weapons, an evil magician that can change him into an elderly man or a helpless duck, or the gold armor. The gold armor allows Arthur to charge up his weapon to release a powerful magical attack. Each weapon has its own magic attack.
- Merlin - the legendary sorcerer appears at the end of the game (only the first time through) to tell Arthur that he needs the Goddess of War's Psycho Cannon. Without it, Lucifer cannot be harmed.
- Red Arremer
- Green Monster
- Skeleton Murderer - These collectors of human souls can emerge from almost anywhere. Usually, they only hunt those who are dying, but in the Ghoul Realm they will attack anyone to defend the front. They are all, of course, patterned after the Grim Reaper.
- Orc Man - Although these pig-like demons are of stout stature, they can jump very high and possess tough, muscular bodies. They melt victims with their vomit before eating them.
- Skull Dragon - Although Beelzebub brought these skeletons of dragons to life, they have a will of their own. They are the resident pets and guardians of the castle of Lucifer.
- Ohme - A giant slug monster, Ohme is a large and formidable opponent. He uses intestinal attacks and has moving weak spots.
- Beelzebub - He is a large fly-like monster who can summon a swarm of insects to attack and disguise its movements. He also shoots poisonous eggs.
- Cerberus - Wreathed in flame, Cerberus is a dog that guards the gates of the Makai. He can summon a hailstorm of flames down upon Arthur's head as he quickly jumps around leaving a trail of fire behind him.
- Gassuto - Hiding within the confines of a cloud cover and only showing their single eye, they move quickly and stalk their victims, thundering with anger every once in a while.
- Shielder - A gigantic monster that detaches his head and uses it as a weapon, he charges madly at his prey until they are no more.
- Lucifer - The ruler of the Makai (after Astaroth's fall) is responsible for stealing everyone's souls, including Guinevere's. He sits on his throne, shooting laser beams from his hands as he stomps, destroying the ground beneath the player's feet.
- Lucifer, whose name was mistranslated to Rushifell, also appeared as the fifth boss in Gargoyle's Quest.
- Lucifer, along with Arthur and Red Arremer, appeared as a card in SNK vs. Capcom: Card Fighters Clash.
Ghouls 'n Ghosts, like many other games during this era of gaming, credited its staff in its default Score Ranking Table, which is as follows: