It is a sequel to a prior Goonies video game released on the Family Computer in Japan, which was only available in North America on Nintendo VS. System arcade units.

Using a command menu similar to Shadowgate (released a few months after The Goonies II), the player explores the area by navigating through rooms, searching for hidden items and interacting with non-player characters.

The player must find and use a diving suit in order to reach underwater areas of the hideout; this item limits Mikey to using a harpoon gun and bombs as his weapons.

Various items found throughout the maze allow Mikey to reach different areas of the map include a ladder, a diving suit, and even glasses which can reveal hidden doors.

An item called a Magic Locator Device can lead Mikey to a hidden Goonie, represented by a blue dot on the map.

When all lives are lost, the game is over and the player receives a password that can be used to resume play at a later time, retaining all items and progress to that point.