The gameplay is somewhat similar to its two predecessors- there are four 'Homeworlds' which contain several other realms. In order to proceed to the next, Spyro must defeat the boss in between each Homeworld. However, to travel to these boss arenas and thus proceed further into the game, Spyro must make his way to the 4 normal realms and the 1 protester realm to fetch one person to help build his transportation.
These realms are free to explore and wander in all directions without any time limit. The realms are littered with enemies which attack Spyro. Upon defeating these enemies, Spyro, as a reward may receive gems. Gems also lay all over the levels on the ground and inside crates. These gems are used later in the game to pay off Moneybags, as well as counting towards your overall percentage.
Levels may also be littered with non-playable protesters, who provide information about the realm or set tasks for Spyro to complete.
Entry to normal realms requires certain amounts of eggs. However, entry to protester worlds ignore the amount of eggs collected and instead require a sacrifice of gems to Moneybags.
Eggs can be found by simply locating them or as a reward for completing one of the minigames inside the realm. These eggs can be said as the equivalent of stars in Super Mario 64. There are many different minigames which reward you with these eggs, i.e. sliding down a slide, racing, piloting a submarine or fighting bosses. Each normal world has roughly six eggs, while protester worlds have three. Spyro can also run into 'Powerup Gates', which give him special abilities for a limited period (time left can be seen on a bar on the right of the screen). These abilities could be a stronger flame, a flying ability or invincibility. Similar to the last two games, there are some areas where you can "super-charge". This means that when you charge while upon a certain track, you can accelerate and move faster, as well as break heavy crates or catch fast thieves.
Including Spyro, there are 7 playable characters which all have there own abilities. All of these characters (excluding Hunter) have their own realm where you can only play as that character. All of these characters (excluding Sparx) have minigames inside other realms.
Once you have defeated the Sorceress, there is an option of getting 100% (which requires collecting all 150 eggs as well as all 15000 gems), Once you have achieved 100%, a secret world will open. This world is called "Super Bonus World", and features much harder versions of minigames already faced in previous realms, as well as absurd amounts of gems.