Three years have passed since the events of "Ghosts'n Goblins" and Arthur the knight once again finds himself battling against the hideous creatures of Demon World. The demons have now seized the kingdom and Arthur returns home to witness the castle's lone survivor, his beloved Gunievere, murdered by the king of the demons, Lucifer. Arthur once again embarks on a one-man quest to destroy the demonic invaders and save Gunievere's mortal soul.

Game-play is of a very similar vein to that of "Ghosts'n Goblins" - the classic run, jump and shoot action remains intact. Ghouls'n Ghosts is, however, even more difficult than its already demanding predecessor. Arthur now has access to several new power-ups to aid him on his daunting quest, such as 'Golden Armour' which gives Arthur greater protection from the demons. Additionally, unlike "Ghosts'n Goblins", Arthur can now fire his weapons upwards instead of just left or right and, while jumping, can fire beneath him as well.

The graphics in Ghouls'n Ghosts are predictably far superior to those of its 1985 prequel, with highly imaginative level design and superbly-drawn, smoothly animated enemies all adding to the game's superb Gothic feel.