The gameplay is similar to Taito's Violence Fight and SNK's Street Smart. The player must jump, punch, and kick their opponent until his/her energy runs out. If the player presses all three of the buttons at a time, the character will perform a "super move". The player begins Pit-Fighter by choosing one of the three playable characters, who all have different moves, speed, and power.

In the player select screen in the arcade version, each player has a color to select the fighters with: for player one it's blue, for player two it's red and for player three it's yellow. As many as three people can play at a time, but there will be extra opponents to fight during any of this game's 15 different matches.

Every third fight is a bonus round known as a Grudge Match.[1] In a Grudge Match, the player must fight against a CPU controlled clone of his or her fighter (if playing alone) or the other players in a multiplayer game. Getting knocked down three times eliminates a player from the Grudge Match, the winner is the last man standing. Losing the Grudge Match does not eliminate a player, but the winner gets bonus money.

The final battle, the "Championship Match", is between the player and the mysterious entity that taunts between matches every once in a while, the Masked Warrior. If more than one person is playing the game before this match, they must fight each other to the death until only one becomes victorious and can fight him.

Sometimes during matches the player will come across foreign objects such as knives, crates, sticks, motorcycles, and bar stools that can be thrown at you or your opponent. The player may also come across a power-up known as the "power pill". If the player or the opponent grab this item, one will become temporarily stronger and take less damage from hits.

At times even the crowd will interfere in the fights. Two characters, known as Knife Man (Milt Loper) and Knife Woman (Dianne Bertucci), will come out of the crowd and stab the player with their daggers. The player can take these nuisances out with one hit. Sometimes there is also a fat bearded man with a stick. If the player knocks him down, the player can take the stick and use it against the current opponent.

The audience will also push any fighter that ends up among them, and stays there more than a few seconds. They will be forced back into the fighting area.