The heroes of the first 2 games return once more to do battle with the ever-present General Morden and his vast army. The third game of the series places a greater emphasis on defeating hulking boss characters than the 2 previous outings. Metal Slug 3 also introduced multiple routes through most levels, vastly increasing the replay value of the game. For example; on the first level the player reaches a point where they can either continue over land, or enter a small submarine and head down into the ocean depths, where they will be faced with a variety of huge, deadly sea-dwelling creatures.

Metal Slug 3 introduced a number of new elements that have a direct effect on the player's character - similar to the 'mummification' of the second game. The first of these is the 'fatty' affect : should the player pick up too much food (fish, for example) their character will morph in an obese version of itself. This doesn't have any detrimental effect on performance and is included purely for reasons of humour. Another effect is the now infamous 'Zombiefication'; should the player's character be attacked by a Zombie, he or she will become Zombie until they are either killed, or pick up a first-aid, which will restore the player's character back to human form. Movement while in the zombie state is slow and restricted but the player is armed with what can perhaps be best described as the 'Zombie Vomit'; a huge arc of blood that can be used to destroy oncoming enemies. A second Zombie attack while the player's character is in a Zombie state will result in the player losing a life.