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The game has 16 levels, though many are quite short. Much like Capcom's Knights of the Round, King of Dragons features an role-playing video game-like level advancement system. Points scored for killing monsters and picking up gold count towards experience, and the character gains levels at regular intervals. With each level, the character's health bar increases, other attributes such as range improve, and the character also becomes invulnerable for a few seconds. Along the way, different weapon and armor upgrades for each character may also be picked up.
King of Dragons features a simple control system that consists of a single attack button, and a jump button. By pressing both buttons, the character unleashes a magical attack that strikes all enemies in screen (its strength varies according to the character used) at the expense of losing energy. The fighter, cleric and dwarf can also use their shield to block certain attacks by tilting the joystick back right before the impact.
This is one of the many Capcom games to feature the yashichi power-up item. There are three such power-ups hidden throughout the game, each giving the player an extra continue.