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GTA2 retained the top-down viewpoint of GTA, as well as the car-stealing/telephone-answering formula of the original. The player has the ability to explore cities on foot or in various vehicles. The aim is to achieve a certain score. On achieving this goal the player then can proceed to the next level. Doing missions awards the player more points than any other method but are not essential for completion of the game.

A new feature introduced in GTA2 was doing missions for separate gangs, of which there are two new gangs for each of the three levels of the game, and one faction which is present in all levels. Being employed by one gang can cause distrust from others (working for gang #1 will incur the wrath of gang #2, working for gang #2 will cause enmity with gang #3, et cetera). In the original GTA, only the local police pursued the player. In GTA2, SWAT teams, as well as two new law enforcement agencies, Special Agents and the army, can begin chasing the player as his or her wanted level increases.

GTA2 also included a saving technique that improved upon that of the original GTA, which saved only when finishing a city. If the player entered a church with $50,000, a voice announced "Hallelujah! Another soul saved!". This notified the player that the game had been saved. If the player did not have enough money, the voice would say "Damnation! No donation, no salvation!" The "safe house" feature would become standard and expanded upon in later GTA games, although saving would become free of cost.

Other minor improvements pertain to city activity. Passing vehicles and pedestrians are no longer cosmetic parts of the environment, but actually play a more significant role in gameplay. Sometimes pedestrians would occasionally enter and ride in taxis. The game is also noted for the emergent behavior of its non-player characters. Pedestrians, gang members and the police would occasionally engage in fights, and there are even other carjackers (Green sweater) and muggers (Red sweater) in the city.

The PlayStation version of Grand Theft Auto 2 is noticeably toned down from its PC counterpart, with lower quotas for the number of kills needed in rampage style missions, and containing no voice acting in the saving interface. The port also includes an unusual feature wherein the player's car will explode after the player runs over a large number of gang members. One level was also changed. Instead of the player tricking civilians into entering a bus to drive them to a meat processing plant to be cannibalized, the victims are Hare Krishna gang members.

As is the case with the original Grand Theft Auto and Grand Theft Auto: Mission Pack 1: London, 1969, the player receives bonuses for running over certain people with car without stopping or braking. A string of Elvis impersonators are sometimes spotted walking the streets. Their deaths are awarded with a large money bonus, followed by the bold words "ELVIS HAS LEFT THE BUILDING".

The PC version of GTA2 was released as a free download on December 22, 2004. This version also includes support for multiplayer games.