Little Fighter 2 is 2-D, and characters are drawn in a super-deformed, pixellated style. The game supports up to 4 human players on one computer and a total of 8 characters using online play or computer-controlled opponents. Characters are controlled using the keyboard or a game pad. Keys can be reset via a configuration menu. The characters fight in an enclosed arena.

Like many other fighting games, combos can be used to activate special attacks, which take mana points. The health points and mana points are represented through bars on the heads-up-display. Items may occasionally fall into the screen to assist players, such as beer and milk, which restore the mana point and health point bars. There are also a variety of weapons that can be used in combat. These include knives, baseballs, hoes, crates, boomerangs, and boulders. All weapons eventually time-out and break.