Cobra Commander somehow survived the last time he fought the G.I. Joe Team. This time he has raised the ancient island of Atlantis from the ocean depths, and is using it as a base. With a nearly indestructible army, and powerful space weapons, the power-crazed Cobra is plotting to use the long lost powers of the Atlanteans in their bid to rule the world.

The game's format is similar to that of Capcom's Bionic Commando series, with an overhead map of the various sub-stages, and bosses (Overkill, Cesspool, Firefly, Major Bludd, Destro) located at Cobra bases sprinkled throughout the game. Advance through the lethal mazes of Cobra's weapons complex, battling soldiers, gunships, laser orbs, and skin-shredding birds of prey. Infiltrate secret storerooms where Cobra Commander carries out his deadly schemes. At each level, find an ally of even greater strength and skill to join your combat team. Cobra Commander is the final boss at the end of the game once again.

There are several playable characters in the game, each with his own unique style and abilities. Once players have discovered a character, they can 'decide' which characters will come with them, and alternate between them during gameplay by pressing the “pause” button and accessing the pause menu. Each character has their own agility, stamina and strength rating, although they are not shown unlike the previous game.

The game's playable characters are: General Hawk, Roadblock, Wet Suit, Snake-Eyes, Storm Shadow, and Duke. At the beginning of the game, the player can only use Hawk, and must unlock the other characters one by one. The player can select which character to control, depending on the situation.Gung-Ho, Spirit, Big Bear, and Stalker are the non-playable supporting characters of this game.