Fatal Fury is back, and with it, the return of the Lone Wolves. Geese Howard may have been defeated, but that doesn't mean all is peaceful. A new opponent, Wolfgang Krauser, has come forth to begin a new tournament. The player can choose one from eight playable characters: Terry Bogard, Andy Bogard, Joe Higashi, Big Bear, Jubei Yamada, Cheng Sinzan, Kim Kaphwan, and Mai Shiranui.
The combat system is more complex than in the first game, supporting four keys to attack. The two-plane (foreground and background) battle system has been retained, but now, the player can move freely to the adjacent plane - just by pressing the Light Punch and Light Kick buttons simultaneously. The main principle remains the same - beat your opponent in a duel with fists and kicks.