Silent Hunter III features two methods of play - either a dynamic campaign or select historically-inspired missions, such as an operation to save the German battleship Bismarck, or the sinking of HMS Royal Oak in Scapa Flow.

[1] In the campaign version of the game, a player begins their career as a "Lieutenant, Jr." (corresponding to Leutnant zur See), with the choice of initial assignments to a U-boat base between the years 1939 and 1943.

The Silent Hunter III campaign will assign the player a certain patrol grid with appropriate naval traffic (such as convoys, destroyer escorts, and task forces) automatically generated by the simulation engine.

The most difficult realism setting in the game allows a player to manually target torpedoes for an attack on enemy vessels.

The simulation engine further generates various coastal and port cities, which appear as large harbors surrounded on the outskirts by town buildings, churches, and factories.

The game also tracks the stats of individual crew members, such as rank, experience, morale, and decorations between missions.