The Gameplay in Castle Crashers is a side-scrolling beat-em-up that incorporates a small number of rpg elements. After selecting a character, the player then selects a starting stage through a map. After completing a stage, the player has the choice to revisit it or to move to another stage. The map also displays shops where the character can buy items and weaponry using coins gained from defeated foes. Arena stages can be unlocked where the player character can take on challenges to unlock additional characters.

Castle Crashers supports cooperative gameplay for up to four players, either locally or online. The game progression in terms of what stages are unlocked is defined by the hosting player; however, each player character will gain experience points and acquire wealth, weapons, and animal orbs independently as they progress with the rest of the party. In each stage, the player can use melee and combination attacks. Each character has a unique magical ability in order to defeat foes and a health metre that, if drained from enemy attacks, will cause the character to fall in battle. In single player mode, this ends the stage; however, in cooperative multiplayer other players may attempt to revive the downed character.

Characters gain experience points by defeating foes which allow the character to level up. Each level gained allows the player to allocate points towards the character's four basic combat attributes. Certain level advances also grant new combination attacks. Progress is tracked for each of the playable characters separately. The character's magic level is also tracked by a meter and regenerates over time. Numerous weapons can be found in the game, each that have various effects to the character's attributes when equipped. The player can find animal companions for their character that may assist in battle, improve the character's attributes, or provide another special ability such as increased treasure earned from defeated foes.Each version of the game features two minigames In Arena, the first minigame, player characters attempt to survive through several waves of enemies. This minigame is available on both console versions. The Xbox 360 version features All You Can Quaff, a button-mashing contest between all characters to attempt to eat as much food as possible.The PlayStation 3 version features a Volleyball minigame for up to four players and four AI characters.