Alex Kidd in Miracle World is primarily a platform game, which also incorporates strategy and roleplaying. The player must finish levels and overcome obstacles and scenarios in a 2D atmosphere. Throughout the eleven stages of Alex Kidd in Miracle World, Alex Kidd faces many monsters, plus the three henchmen of Janken the Great, before facing Janken himself.

Alex Kidd is the only playable character in the game. His primary skill is punching, which he can use to attack enemies, break certain types of rocks to open blocks, and access new areas and collect money. Breaking or stepping on certain blocks releases an evil spirit that will try to kill Alex; others unlock a great ability to jump.