Crouching Tiger Hidden Dragon is set in Qing dynasty China in the 19th Century and follows the story of Jen, Yu Shu Lien, and Li Mu Bai. When warrior Li decides to retire from fighting, he gives his famous jade sword, The Green Destiny , to a nobleman. The weapon is stolen shortly afterwards, and he has to hunt down the thief with his friend Yu Shu Lien, while the sassy nobleman's daughter Jen keeps crossing their path.
The game is split into three parts, one for each character, mimicking the film's famous martial arts. Players can use a set of basic attacks, attack combos, and special moves, combined with defensive actions such as blocking, combo blocking, and evasion. While fighting, players learn new moves, collect items, and earn rewards. Skills are improved according to your fighting style, with using specific attacks boosting related skills that can be leveled up.
The game offers different flavors of weapons to be collected, including axes, swords, spears, sabers, and exotic variants like the falchion, firangi, or gloive. New ones can be acquired during battle, but enemies can also pick them up.