While Alleyway is a portable clone of Breakout, it adds several features, including alternating stages, bonus rounds, and hazards for the player at later levels.

Alleyway was released with limited advertising, receiving moderate to low scores from reviewers who compared it to games like Arkanoid.

[14] If the player contacts the ball with the body of the paddle before it falls into the pit below, it will bounce back into the playing field.

Whenever the ball starts to loop between objects such as the ceiling, indestructible blocks and/or the paddle itself, its velocity will change at a random point after the second cycle on its next collision.

As a result, the ball will travel at a slightly raised or lowered angle depending on its current trajectory, and will break out of the loop.

Most levels follow a generic design, though one group is modeled after Mario's head as it appears next to the remaining paddles icon.

Bonus stages feature patterns based on various Nintendo Entertainment System Super Mario Bros. sprites, such as a Piranha Plant, Goomba or Bowser.

[3] Unlike regular levels, the ball will destroy blocks in these stages without ricocheting off them, and contact with the ceiling will not affect the paddle size.

Destroying all bricks before the timer expires yields additional bonus points, which vary depending on the level.

[23] On June 6, 2011, the game was re-released as a launch title for the Nintendo 3DS Virtual Console system via online distribution.

[27] The game was one of the first titles made by the Nintendo R&D1 development team, alongside Tetris and Radar Mission.

[28] Alleyway was re-released for download onto the Nintendo Power cartridge, occupying one memory block on the device.

[31] Although Alleyway sold well enough during its production run, it has not been re-released as a Nintendo Player's Choice title,[28] and reviews of the game have been mostly mixed.

Mean Machines gave the game a score of 33%, criticizing its repetitiveness and stating "this variant doesn't have much more to offer than the original [Breakout]".

The magazine's staff added "once you've finished a couple of screens, you'll be bored stiff" and compared the game to its predecessor, Arkanoid, regarding the lack of power-ups in Alleyway.

He further added at times the game appeared to "hate" the player with its difficulty, though acknowledged that the addition of save states "takes some of the sting out of losing".

[13] Retro Gamer's Darran Jones called it "pretty piss-poor all the way back in 1989", noting the bland levels and lack of power-ups found in Arkanoid, and that many similar clones had outperformed it.

[34] The book Rules of Play discusses the game as an example of improved design over a base core mechanic, citing the inclusion of distinct sound effects for ball collision as a means to praise the player for destroying bricks, and the varied level designs as "well done" and giving the player "an element of discovery to the overall experience".