The game is a standard rehash of other formulas in 3D fighting games that were released for the XBOX as non-arcade ports, ones such as Kakuto Chojin: Back Alley Brutal, Tao Feng: Fist of the Lotus, and even the best out of the first two, which is Dead or Alive 3. In a side-view, players control one of two characters who perform various fighting moves until one is beaten. Fight Club structures the formula around the premise of the movie, where two men meet secretly to fight each other into submission. In the game, players play as one of the 10+ original characters such as fighters from the novel and movie including Tyler Durden and Bob Paulson.
The game tries to capture the gritty feel of the movie with injuries inflicted on players and blood splattering everywhere, including onto the screen. The game also tries to introduce many new features into the fighting game genre. There is a Hardcore mode, where injuries are carried over from one fight to another, which could lead to the player being so injured that he is forced into retirement. The game also goes into a mode showing X-rays of the character to show bones being broken. The fighting moves are intended to be brutally violent, such as one where the opponent's arm is visibly broken at the elbow. The levels are also designed around scenes from the movie, such as Lou's bar and Paper Street.
There is a story mode, built around an original character—named only Hero—who joins Fight Club after breaking up with his girlfriend. By winning fights, the character moves up through the ranks of Fight Club, getting closer to Project Mayhem and become Tyler Durden's right-hand man. The story diverges from the movie and novel in several ways to accommodate for the new character. Winning Story mode also unlocks Fred Durst, lead singer from Limp Bizkit, as a playable character.