Pandemonium 2 is a psychedelic 2.5D game; specifically, it renders characters and environments with polygons and uses a 3D camera to create the appearance of 3-D, while gameplay is actually on a 2-D plane. Players can choose to be either Nikki or Fargus - who each have different specialties - with the option to change for each level. The player characters' abilities have been expanded over those in Pandemonium! with the ability to climb ropes, crawl, and pull themselves up ledges. During the quest, players can earn extra lives by collecting treasure.

Unique powers collected during gameplay may replace, extend or add to previous powers, depending on which character is in play and which power has been obtained. The characters handle the unique powers differently. For instance, collecting the "fire power" allows Nikki to shoot destructive fireballs, while it grants Fargus invincibility and a deadly touch, but requires him to constantly move forward. Machines and equipment are also available throughout the game, although they are tied to certain areas.
How does the "fire power" help Fargus?
It grants Fargus invincibility and a deadly touch.