Xybots is a sci-fi shooter with pseudo-3D environments explored from a third-person perspective. The game can be played by one or two players, the two-player mode takes place on a split screen. The hero(es) must move through a series of Gauntlet-style underground mazes, killing the bad guys and collecting health and other bonuses from flying saucers. It's designed to be played co-operatively, although bullets from one player can harm the other.

The Xybots are out to stop the protagonists, and many have advanced attack patterns as well as bullets to fire at them. Being able to view round corners is useful, allowing the player to plan a strategy - often it's good to send one player forward and let the other play the waiting game, similarly to the tactics often employed in Gauntlet.