In Hello Neighbor, the player finds themselves moving into a new house across the street from a mysterious neighbor who is behaving in a paranoid manner and seems to be keeping a secret in his basement. The player's task is to break into the neighbor's home and solve a series of puzzles in order to gather the items needed to unlock and access his basement. As the player explores the neighbor's house, they must not be spotted by the mysterious neighbor, or they will be chased down, and if the player is not quick enough to hide or escape, they will be captured. The player can stun the neighbor by throwing objects at him for an easier escape. If the player is caught (or suffers a serious injury), they will be sent back to their own house and will have to break in again. Upon starting again, the player must be more careful, as the neighbor will deduce movements from the last attempt to set up traps.[7] However, the player can use the game settings to turn on "friendly" neighbor mode, preventing the neighbor from setting these traps and causing him to be less aggressive in his pursuits. However, he is still to be avoided at all costs.[8]
The game is divided into four parts: Act 1, Act 2, Act 3, and Act Finale. The game is played in a first-person perspective, and the player must aim a reticle at certain objects to interact with them or to throw or use a currently held item (for example, throwing a ball at a window or aiming a crowbar at nails to remove them). Up to four items can be kept in an inventory space. Items of the same kind cannot be stacked together in one slot.