The Dark Ones have captured the Ring of Five and imprisoned the wizards that guard it. A barbarian named Lykos has the power to transform into different creatures. He needs to rescue the wizards and the Ring of Five from the Dark Ones before they invade his home, Krellion.

Shape Shifter is a side-scrolling action game with platforming and light role-playing elements. Much of the game consists of traversing hostile areas, fighting regular enemies on the way and defeating bosses. The game's "hub" area is a town where Lykos can replenish his health and buy any of the three available weapons (axe, mace, or bow). These weapons can be upgraded by enchanting them or picking up power-ups.

After Lykos rescues a wizard he gains access to a transformation power. Transformations require special gems and cannot be performed if Lykos runs out of them. There are four transformations in the game: the panther can jump over large gaps; the shark can swim; the golem can jump higher; and the golden dragon can fly. Each of these forms can also collect power-ups that unlocks a few other attack abilities.

The game's stages are interconnected, but usually a new form must be acquired before Lykos can access a new area. Lykos has eight lives consisting of smaller health units (hearts). The game can only be saved in the town.