The game is played from a first-person perspective. The playable character Jack is very agile, being able to traverse dangerous environments by dashing, jumping, wall-running, and sliding. He can also utilize a grappling hook to swing through the environment, and use “Sensory Boost”, which briefly slows down time, allowing Jack to strafe through the air. The game also introduces a stamina meter, which dictates how frequent players can dash and deflect attacks. While a sword is the player's primary weapon, Jack also has access to several special abilities, which can be used in both combat scenarios and solving puzzles. Both Jack and his enemy have very limited health, and both can be killed in one hit. The game introduces vehicular combat. During certain levels, Jack is able to ride a motorcycle while combating enemies and avoiding obstacles. Levels in the game are more non-linear, with players being able to plan their own routes before confronting the enemies. As players progress in the game, they can purchase upgrades that further enhance Jack's abilities.

Following the events of the previous game, Dharma Tower has fallen into chaos. Without the Architect or the Keymaster and their armies, different factions vie for control of the tower by hoarding resources and fighting against others. One faction, the Hammers, has recently become much more dangerous and organized following the arrival of a new leader, Ahriman, another Ghostrunner, and alongside projections of two other Ghostrunners, Rahu and Madhu, collectively called the Asura, uses the reactor at the summit of the tower to revive the Asura's deactivated leader, Mitra. Jack pursues Mitra through the city and ultimately out of Dharma Tower altogether. Jack emerges in the apocalyptic Outside, and navigates the scorched ruins, finding the Outside populated with feral biomechanical humanoids created by Madhu called “Scions”.