Although James Cameron's Avatar: The Game is named after the movie, the story itself doesn't follow the plot of the film. Instead the player takes on the role of Lance Corporal Ryder, a signal-specialist who is send to the distant moon Pandora. But Ryder isn't just any other soldier. Instead he or she is one of the selected group of people that take part in the so-called Avatar-program. Avatars are a hybrid of Na'vi DNA and human DNA that have been created in order to better interact with the inhabitants of the planet: the Na'vi, tribe-like and technology-wise not very advanced people that are one with nature. Although the Na'vi are friendly to the new-comers at first, soon the humans want more than just diplomatic relations. They want to relocate the Na'vi in order to be able to strip the planet of its natural resources. A war breaks out which only one side can win - it is up to the player which it will be.

Early in the game the player has to decide weather he wants to help the Na'vi unlock the power of the Well of Souls or if he wants to stay with the humans. Depending on his choice, the gameplay changes significantly:

Human: As a human the player can enter buildings, drive vehicles like buggies and helicopters and use full-body armor as well as several different kinds of firearms including shotguns and flamethrowers. In addition Pandora itself is against him meaning both plants and animals will attack the player but will also grant experience points. As a human the player can build pods that replenish ammo and health a specific locations.

Na'vi: The Na'vi are more than two meters high and as such can neither enter buildings nor use humans vehicles. But Pandora herself is friendly so plants and animals won't attack (or give experience points for that matter) allowing the player to ride strange horses or fly around on huge dinosaur-like creatures. While the player himself is able to use a machine gun, normally the Na'vi rely on bows and arrows as well as strange swords and staves. If the player manages to pull of a five-hit-combo, a special attack comes available. Na'vi harvest plants in order to get arrows and cell samples.

Both characters have in common, that they are controlled in a standard 3rd-person-shooter-fashion and have to collect DNA/cell samples. Once enough have been collected, the player gains the ability to get right back into the fight after his hit-points reach zero. Only if not enough samples have been collected will the player re-spawn at the nearest outpost. Also both parties earn experience points for completing quests and killing enemies. Once enough points have been collected, the character levels up and get's access to new weapons and spells allowing him to make himself invisible for example.

Pandora is divided into several sectors and each sector features several challenges like lifting 100% of the fog of war or collecting a certain amount of cell samples. Fulfilling these objectives grants additional experience points. To further help the player in his quest, a world-domination-mini-game is available at each transporter. This mini-game is turn-based and has the player starting out with only one sector and the goal of conquering all the other. Doing so will grant his character additional experience points, increase his weapons strength and such. Money for building bases and ordering troops on the other hand is earned by playing through the normal campaign. To conquer enemy sectors, three types of units are available that can only be build at a base. Combat is a simple numbers game and plays out automatically. To defend conquered sectors, a defense building for each type of unit can be build.

The game offers five team-based multiplayer-modes: King of the Hill, Capture the Flag, Team Deathmatch, Capture and Hold (capture control points in order to make the enemies team loose victory points) and Final Fight where the RDA has to protect three missiles in their base while the Na'vi have to destroy them.