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The player controls a yellow armadillo with a red hat named Billy the Shell. Before each level, the player gets to move around on a board game-type screen, reminiscent of Super Mario Bros. 3. There are a lot of small squares, and the player can move on them one at a time. There are also some larger squares with pictures on them, and if the player is on them, he/she can choose to begin an action stage, which has to be cleared before the player can pass it. There is also another character moving around on the board, and if the player is on the same space as him, they can choose to be sent into a boss battle, which has to be cleared to move onto the next world.

The player can walk around and jump, and he can also roll into a ball. The player is able to move around when in a ball as usual. While control in this form can be slippery, it is the only way to get rid of enemies, for the player will die when touching them in regular form. Also, the player has only one jump height in standard form, but he can bounce higher in ball form by holding the jump button.

There is also a two player mode. Two players (player one has a red hat, player two has green) take turns moving around on the same map and playing the stages when they reach them. If the boss is defeated, both players will go on to the next board.

A bonus life is awarded every 30,000 points.

There were plans for Armadillo to be released in North America, as well as a sequel, but both were cancelled. A sequel called "Armadillo Gaiden" was also in the making for the Nintendo Game Boy, however, it instead got relicensed and sold as "Ultraman Ball".

Among some NES enthusiasts familiar with unlicensed, hacked and pirated game cartridges, this game is also known as Super Mario IV, in which the armadillo's character sprites have been edited to look like Super Mario.