Pegasus II is a Scramble variant. As such it is a side scrolling shoot 'em up where the player flies his ship over a mountainous terrain. On the ground there will be different enemy installations that the player can attempt to destroy by dropping bombs onto them. There are also rockets that launch from the ground and that the player can use his ship's laser beams to shoot down. As progress is made through the game various flying enemies (birds, saucers, dragons etc.) will appear. Any contact with an enemy or the ground will lead to a lost life. The player has five lives when starting out.

Also included is a terrain generator that allows the player to create his own landscape to fly over. This is done by the player defining twenty one separate frames of landscape that the program then throws together randomly.