Avenging Spirit follows the story of a spirit seeking revenge after being murdered by a group of gangsters who have taken his girlfriend hostage. Her father uses a new machine to bring the spirit back from the dead, offering him a deal: hand over research on ghost energy in exchange for his daughter's safe return.
The game is an action-adventure side-scroller with six different stages set in various locations, including the city and its sewers. The player can possess 20 enemies to use their skills or weapons to complete levels. The spirit's health is represented by ghost energy, which drains when not inside a host. The player's choices lead to two possible endings.