In spite of its Japanese origin, Lunatic Dawn is in fact much more similar to very old-school Western RPGs than to its Japanese brethren. It has virtually no story and relies entirely on exploration and strategic combat. Set in a medieval world with little to no distinguishing characteristics, "Lunatic Dawn" throws the player immediately into the game world, which is open for him to explore. The player is able to choose the main character's gender, race (human, elf, etc.), class, and even age - older characters are more powerful, but have a more limited play time.

Indeed, the entire gameplay process is timed. Traveling to a remote city or dungeon can take up to several game days. The player has to provide sufficient food for his party during this time. Player party consists of pre-generated characters, who have different names and belong to different races and classes, but have virtually no personality. Food and other supplies can be acquired in towns, through which the player moves in a Wizardry-like fashion - viewing locations from first-person perspective and selecting menu commands.

When the party enters a dungeon, the view switches to isometric. The dungeons are large and maze-like, with enemies visible on screen. Upon contact with an enemy, a battle initiates. The battles are turn-based but fast-paced, reminding somewhat the Infinity Engine battles from Baldur's Gate series. The participants can freely move on the battle field. The player directly controls only the main characters, but can assign general commands to the party members.