Oriental Legend 2 follows up the original game by I.G.S. with another romp through Journey to the West. The original game's five characters are joined by three newcomers: Er-Lang, Drakan, and Princess Iron Fan. Two more characters can be unlocked after completing the game once.

Like the original game, this is a scrolling beat-em-up for up to four players. This time around, character growth is a major gameplay feature. Players earn experience for defeating enemies and level up, with underleveled characters much more likely to have trouble beating late-game bosses. There are three game modes. "Plot" features seven stages with a regular difficulty level designed for regular players. "Online Ranking" is a more challenging eight-stage mode which, when completed, provides the player with a code to input at the official website in order to share their codes on the online leaderboard. "Challenge Boss" is a boss rush that goes through all of the bosses in the game, with players challenged to get through in as little time as possible.

This is the first game for the PGM2 to feature support for the hardware's card reader accessory. By buying an IC card at their local arcade, players gain the ability to save and load their character's progress, allowing them to keep their level growth and items between runs.