Parasite Eve II is truer to the survival horror genre than its predecessor, which inserted role-playing elements into the mix. The only real role-playing element present in Parasite Eve II is the use of experience points to gain access to higher levels of Parasite Energy, the game's equivalent of magic. Other character attributes include HP (Hit Points, or health) and MP (Mitochondria Points) used to power Aya's 'Parasite Energy' abilities.
Character control is accomplished in a traditional survival horror manner: Aya is able to move forwards, backwards, and pivot left and right. Camera movement is limited, generally being confined to a single view of a room or area, and cannot be altered by the player.
Unlike Parasite Eve, there is no Active Time Bar that governs the order of actions during a battle. Battles take place in real time, so the player is free to act as they see fit. Another contrast is the absence of the 'range dome' seen in the first game, allowing the player to shoot at off-screen targets and engage targets from a safe distance. There are also no random battles; enemies will be found wandering in plain view, hence allowing the player to avoid confrontations and plan strategies. Aiming, as with most other games of this genre, is accomplished by cycling through the various 'lockable' targets within Aya's range.
Equipment can be obtained through various methods, including finding, purchasing and 'creating' items such as body armor, weapons, ammunition and tools. Unlike most other survival horror games, ammunition is almost never in short supply. While Aya can only carry limited amounts of equipment with her, inexhaustible ammunition boxes exist in most areas and can be revisited as often as required for a top-up. This encourages the player to fight rather than run, which is essential to the gameplay as it is the only way to gain experience and thus for Aya to become powerful enough to succeed. While equipment follows the original game's concept of being customizable, in general the weapons and armor are quite limited in the alterations available. Armor, which not only reduces damage but also affects the amount Aya can carry, has the option of adding extra item slots up to a limit of ten.
The Parasite Energies are divided into four areas: the offensive Fire and Wind elements and the defensive Water and Earth elements.
Once the game has been completed, bonus items become available for the player should they choose to redo the game in Replay mode. Other modes also become available, such as Bounty Hunter and Scavenger which are more difficult for the player to complete. The most difficult mode "Nightmare" only becomes available after completing the game in Scavenger Mode.
The game opens to reveal Aya Brea, the protagonist of the original Parasite Eve game, who is now an FBI operative in their Mitochondrial Investigation and Suppression Team (MIST) being dispatched on an urgent mission in central Los Angeles, where there have been reports of NMC sightings. The first chapter in the game puts Aya in the position of investigating the Akropolis tower where she finds a slaughtered SWAT team and an NMC infestation. She soon discovers that the NMC's can take on human form, and eventually encounters a different type of creature; a humanoid Artificial Neo-Mitochondrial Creature (ANMC) called Golem No. 9. She encounters this ANMC three times in the game. Golem No. 9. destroys the tower, but Aya along with her colleague Rupert, who has been at the scene before she arrives, escape in a Police Helicopter.
After a brief interlude, the next chapter finds Aya in the desert town of Dryfield. It is nothing more than a truck-stop on a seldom used highway, with a motel, garage and diner but little else. Upon arriving, she finds that Dryfield too is infested with NMCs. She later encounters a survivor (Mr. Douglas) and his dog, Flint, who will act as her source of news and equipment for much of the game. She later rescues Kyle Madigan, a private investigator who claims he is on a mission similar to Aya's. He tells her about "The Shelter", a nearby underground facility that may hold the answers to the recent outbreak of NMC's.
After spending some time in Dryfield, Aya and Kyle find an entrance to the shelter located in an abandoned mine. They part company and she proceeds to investigate the shelter alone. As Aya explores the shelter she discovers that the ANMC's are the result of genetic engineering in an attempt to artificially create superior life-forms, and that in some way she is closely involved. The game's storyline unfolds through various animated cut scenes that appear at regular intervals when plot points are triggered; one of these reveals that the ANMC's were created from her own DNA.
Eventually Aya discovers the game's fourth and final area, the Neo-Ark (Shambala in the Japanese version), the entrance to which is concealed in the shelter. She finds out that the Ark facility was intended to be a showcase of ANMC technology, divided into different habitats, with zoo-like visitor commentaries and viewing platforms throughout the area. Habitat containment has broken down and the ANMC's are loose. This area is now infested with the creatures too. The goal in this area is for Aya to disable the power generator, which allows access to an area that could not be reached in the shelter. Returning to the shelter, and reunited with Kyle, Aya rescues a girl that has been manipulated into controlling the hostile NMC's. She also finds out that the girl, Eve, was created from her own DNA, making her, in a sense, Aya's daughter. Eve is later kidnapped by No. 9.
Returning to the shelter entrance, Aya encounters a small army of Golems, but is rescued by the US Marines, who have been alerted by Aya's contacts at MIST. She later receives a gift from Mr. Douglas, via Flint, of supplies. She decides to use Flint to help her find Eve, giving him Eve's bear to let him track her scent. He leads her back into the shelter. Aya tracks Eve down to a room containing an enormous cocoon, to find No. 9 incorporating Eve into it. Kyle is there as well; apparently helping No. 9. Kyle eventually turns on No. 9, preventing him from placing Eve into the cocoon. After a cut scene showing a satellite weapon being fired per the President's orders, and Dryfield being wiped off the map, Aya and Kyle find themselves separated by a hole that has penetrated all the shelter's floors. She looks down to see Eve hanging onto a piece of debris on the edge of one of the lower levels.
Eventually, the cocoon breaks open having been dislodged by the impact of the weapon, revealing the largest NMC in the game. After defeating this creature, Eve herself transforms into a very fast and powerful winged NMC that resembles Melissa Pearce-Eve's second to last form from the first game. Again Aya must fight. Once this final battle is concluded, various cut scenes are shown depending on the actions of the player during the game.