Master Higgins' girlfriend Tina is kidnapped once again, this time by a group of aliens that have also kidnapped his animal friends. Higgins must once again travel to eight different islands and go after the aliens keeping Tina hostage.

The rules of the game are not very different from those of the previous game, Adventure Island II. This time, Higgins can now crouch, an ability he did not have in the previous NES games. However, he loses the ability to backtrack during a stage. Unlike the previous game, the boss does not move to a different stage when the player loses a life.

The inventory system from the second NES game is still present, but this time he has eight items to choose from instead of just five. Higgins now has a fifth dinosaur friend who can help him out: a triceratops (summoned by a star card) that can defeat enemies with his rolling attack. The other new items include a boomerang weapon that can be used as an alternative from Higgins' traditional stone axe weapon, and a crystal that provides Higgins with temporary invincibility when he begins a stage.

There are now different variety hidden rooms as well, such as a treasure rooms where Higgins can choose a new power-up or a surfing bonus round.

The Game Boy version features a password system, as well as an interactive overall map that allows the player to revisit previously completed stages to find new paths.