Jagged Alliance 2 is an isometric, third-person perspective turned-based strategy game. The role-playing elements of the game refer to (mostly) character development. The game is also able to switch between two different styles: sci-fi or realistic modes. From a new game, players will use their laptop to review information and hire mercenaries. Following that, the political map shows a satellite top-down position of the island of Arulco. From the map, equipment and funds are managed, as well as a review of enemy movement, and planning can be made to capture towns, mines and other locations. From the map, mercenaries can be deployed into a specific sector. Hostile sectors and enemy counter-attacks initiate combat mode.

The combat screen is where most of the actual gameplay occurs. Traveling in towns, exploring houses (with the purpose of stealing stuff of course!) and most importantly combat, occurs here. An encounter with an enemy team (either offensive or defensive) will prompt a battle in the area of contact. If on the offensive, players may opt to place mercenaries in favorable positions. Each team plays in turns, unless their action in interrupted by an opposing member. Enemies come in all shapes and sizes: enemy soldiers, tanks, bloodcats, and (in sci-fi mode) insect-like monsters. The team that remains alive will control the sector.

In order to recapture the island, players must engage in town militia management. A defense system must be organized for newly conquered towns to defend against enemy troops. Only loyal towns however may have its population trained into militia (indicated by a green percentage on the town via political map). A maximum of 2 mercenaries may train militia in any given town. The militia has 3 different training levels: green, regular, and veteran. The first 2 may be acquired through training, while the veteran status may only be acquired through combat.