The game is a traditional side-scrolling platform game. The player controls Joe Musashi and must complete eight districts before the final confrontation with the head of Neo Zeed. Each district consists of three scenes, two of which are platforming levels and the third being a battle against a unique boss-character.

The directional pad moves Joe around while the A, B, and C buttons are used to perform ninjitsu techniques, attack, and jump respectively. A key move in The Revenge of Shinobi is the somersault, which maximizes Joe's jumping height and enables him to throw eight shuriken at once in mid-air. Additionally, some stages consist of multiple layers, such as the first scene of the Military Base and the freeway in Area Code 818. Switching between layer (outdoor/indoor, or on-the-highway/next-to-it) is also done with the somersault move.

Although his standard ability of moves and attacks, Joe has the ability to do four special ninjutsu techniques. Only one can be performed in each level, unless a ninjitsu item was picked up, or the ninjutsu of Mijin was used.

A variety of bonus crates can be found in each level, some hidden in the scenery. These include simple powerups such as extra shuriken or health packs, as well as special items to gain lives or extra ninjutsu attacks. Besides powerups, some crates may contain time bombs: explosives that detonate when their fuse runs out or if Joe comes too close (though he can walk out of the blast radius if the player is quick enough).

The game is divided into four difficulties. As difficulty increases, more enemies appear per stage; on Hardest, Musashi takes twice as much damage and the amount of starting lives decreases from 10 to 1. From the options menu, the player can also choose the amount of starting shuriken from 0 to 90 (though a technique does exist that allows infinite shuriken).