Gameplay in Mega Man Xtreme 2 is similar to that of earlier Mega Man games, retaining most elements from the home-console versions of the series, but adding the ability to switch between characters, use unique abilities and obtain upgrades through "DNA Souls" collected from fallen enemies.

Mega Man Xtreme 2 was first announced in Japan in March 2001; Capcom was intent on localizing it for the western market.

The Mega Man X universe is set in the 22nd century, where humans and intelligent robots called "Reploids" live among one another.

Stages are typically linear, and present traps and enemy robots to combat, whereby the player can collect DNA Souls and items that refill health, ammunition, and extra lives; power-ups that improve the player's maximum health; and armor parts that grant X new abilities.

[8] A difficulty setting called "Xtreme Mode" in which the player can switch between X and Zero on any stage, allowing them to gain different weapons depending on which bosses they defeat, can be unlocked.

Artist Haruki Suetsugu designed the characters and Japanese package art for the game; he expressed joy over being able to illustrate Iris, having not been able to do so since Mega Man X4.

[2] Berkana and Gareth were drawn as a witch and a knight respectively to tie with the medieval theme of the villains in the first Mega Man Xtreme.

[1] On July 18, 2013, it was confirmed Mega Man Xtreme 2 would be released on the 3DS Virtual Console in Japan on December 25, 2013,[11] and in North America on May 29, 2014.

[3][7][14][16] Giancarlo Varanini in GameSpot complimented the DNA Soul system as "interesting"[3] while Skyler Miller in AllGame said in addition to the character-switching feature, both make the game "feel somewhat fresh".

[14] Varanini said most of the unbalanced difficulty from the first Mega Man Xtreme has been alleviated, except for parts in which the player must leap off platforms without being able to see the next portion of the screen.

[3] Miller wrote, like other Mega Man titles, the game's difficulty level is "challenging to the point of frustration, but it somehow keeps from feeling impossible".

[3][7] The two reviewers criticized the game's storyline and translation; Miller found the instruction manual and in-game texts to be inconsistent with one another in both narrative and character names.

[7] Varanini noted the plot's introduction mistakenly renders the word "laboratory" as "lavatory", which he said "ironically speaks to the quality of the storyline".