The player takes the role of a Special Forces Operative. The object of the game is to rescue the five hostages in the concentration camp. The game is divided into six stages: Communication Setup, Jungle, Village, Powder Magazine, Concentration Camp, and Airport. Completion of each stage advances the story. For example, upon completing the Jungle stage, an enemy leader is interrogated and the location of the enemy's concentration camp is found. This was one of the first shooter games to feature a storyline, and it had some similarities to real special operations missions.

The game is controlled with a fixed swivel mounted light gun controller attached to the cabinet, with force feedback to simulate recoil. In order to complete each stage, the player must shoot as many soldiers, tanks, jeeps, choppers, and boats as the game requires. Soldiers can throw hand grenades and knives, and vehicles can shoot missiles and launch rockets. The player's ammunition and grenades are limited, but can be stocked up by shooting barrels and crates or by shooting animals such as chickens and pigs. Occasionally a high-powered machine gun power-up appears, allowing the player's gun to have unlimited ammo and an increased rate of fire for 10 seconds.

The player has a damage bar that increases each time he is hit. The damage bar also increases if a civilian or hostage is shot. Energy boost items randomly appear which, if shot, decrease damage by five points. If the bar reaches maximum, the game ends.

One of the most ported arcade games of all time, it has seen releases on everything from the CPC to DOS, as well as the NES, the Sega Master System, the FM Towns and the TurboGrafx-16. Most of these ports lack any kind of light gun support (with the notable exceptions of the NES, Sega Master System, and the ZX Spectrum, which featured Magnum Light Phaser support) and must be played with a keyboard or a controller. The box for the Master System version features promotional art from Operation Thunderbolt.

In 2005, Operation Wolf was released on the Xbox, PlayStation 2, and Microsoft Windows as part of Taito Legends; however, light gun support is unavailable. On February 4, 2008, the NES version of Operation Wolf was released on the North American Wii Virtual Console. Whereas the NES version allowed NES Zapper support, the VC re-release does not feature any kind of light gun support (including the Wii Remote's pointer functions), making the game only playable with the standard controller mode.

The game won several awards at the Golden Joystick Awards, including Best 8-bit Game Overall, and Best 16-bit Coin-op Conversion. In the Spectrum sales charts, it was number two, behind Robocop, which was number one every month for most of the year. It was also voted number 26 in the Your Sinclair Readers' Top 100 Games of All Time.