Sky Destroyer is an aerial combat game. Players take on the role of a warplane tasked with defeating various enemy combatants in the air and sea. The player's warplane is equipped with machine guns and can also fire torpedoes. The main objective is to destroy a fortified island at the end of each scene by firing a torpedo at it.
Gameplay is viewed from behind the plane viewpoint while flying. Time progresses as the background changes from day to night and back again, helping indicate progress throughout the level. As each daytime sequence completes, an island should be approaching soon. After destroying the fortified island, players can engage in a bonus stage where their goal is to destroy as many enemy planes as possible from an incoming fleet, with each destroyed plane adding to their score.
The player begins with three lives, which can be lost by taking damage from enemy fire or crashing into the water below.