WipEout XL is set in the year 2097, around four decades after its predecessor. Instead of the F3600 anti-gravity racing competition, the game features an even faster and more dangerous tournament: the F5000 AG league. The gameplay system is similar to that of the previous game: players race against each other or computer in high-speed futuristic environments, liberally picking up weapons scattered around the stages and using them against the opponents to finish the race in the highest position.

Whereas the original game introduced the F3600 anti-gravity racing league in the year 2052, Wipeout 2097 is set over four decades later and introduces the player to the much faster, more competitive, and more dangerous F5000 AG racing league. The game is set exactly 101 years after the actual release year of the game (100 in the Saturn port's case).

The Sega Saturn version supported analog control by using the optional 3D Control Pad, whereas the PlayStation version supported analog control by using the optional Negcon twist controller (as on debut release of the series).