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 Fatal Fury 2 tournament. The Lone Wolves return, with new faces amongst them. Only one can be declared the winner though.
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 game has four bosses. The combat system is more complex than in the first game, supporting multiple attack buttons. The two-plane battle system has been retained, allowing players to move freely between planes by pressing the Light Punch and Light Kick buttons simultaneously.