Control a clown to pull in and throw back balloons hurled from the top of the screen. If you line up three or more balloons of the same color in a vertical row, they will burst. If you're not quick enough, the balloons will squash the clown and the game is over. Once you've got the hang of bursting balloons, you'll need to master combos and chains.

The third Magical Drop game, first released in 1997, was also developed for the Neo Geo. This games adds representatives for the remaining Tarot Major Arcana, as well as introducing a "daughter" Strength character that more closely resembles the traditional depiction of Strength. The game adds a third button, which allows players to add rows to their field at any time. Additionally, attacks now sends lines to the opponent in non-even rows that vary by character. Hirameki mode is replaced by Adventure Mode, which is a board game that challenges players to reach Empress before CPU-controlled rivals. The English versions of Magical Drop III remove the hardest difficulty setting in Vs. CPU Mode and rival opponents in Adventure Mode.