Ninja Gaiden II keeps most of the core elements its predecessor utilized. Protagonist Ryu Hayabusa engages the world in a third person over-the-shoulder perspective, beginning the game with basic, low-level abilities and weapons that can be upgraded as he progresses by discovering or buying items. Ryu can interact with the game environment by running along and jumping off walls, swinging from pole to pole, or running across water. Ryu will travel around the world, ranging from New York, Tokyo, the familiar Hayabusa Village, the Aqua Capital (with an environment similar to the canals of Venice), and regions of non-human origins, such as the Northern Purgatory, Lifeblood Shrine and Niflheim.
Cut scenes serve as the narrative to the story, and dragon busts can be used to save progress, permitting gameplay to be resumed at a later time. Certain busts will enable the player to record films of gameplay and upload the videos onto Xbox LIVE for users to download and watch. Ninja Gaiden II uses the same scoring system, based on the player's speed in clearing encounters, the number of kills achieved, the number of unused magic spells (or ninpos) remaining at the end, and the amount of cash collected. Players can compare their scores on online ranking boards.
The Story Mode can be played at four difficulty levels: Path Of The Acolyte being the easiest, followed by Path Of The Warrior, Path Of The Mentor, and Path Of The Master Ninja being the hardest.