Like in the game Golden Axe which was released two years prior by Sega, enemies walk onto the screen from both sides as well as occasionally appearing from other locations. The player must defeat each opponent to progress through eight locations, known as rounds. With the exception of round 7, there is a boss battle at the end of every round with a disproportionately large enemy. Unlike its sequels, none of the enemies are named within the game (they are named only in the Japanese version's manual) and only the bosses have life gauges. As in contemporary games Double Dragon and Final Fight, the player can pick up weapons, which include knives, bottles, and drainpipes. In Streets of Rage, the special attack has assistance from a police car, which enters the screen from the left and fires explosives, taking health from all enemies. The player is given one special attack per life or per level and power-ups shaped like police cars supply another. In round 8, the special attack can't be used.

There are three playable characters in the game:

Adam Hunter possesses high power and jump ability, but slow movement.

Axel Stone is high-powered and moves quickly, but has poor jump ability.

Blaze Fielding moves faster than the others and has good jump ability, but is the weakest character.