Spy war is about the slapstick antics of two spies trying to kill each other with improbably complex and elaborate traps and weapons.

The object of the game is to collect various secret items in a briefcase and exit the building through a door to the airport before the opposing player, or before the timer runs out. While searching for the items, traps can be laid to take out the opponent (or the player himself, if careless). Each spy has a personal countdown timer which depletes by 30 seconds upon each death.

The arena is an embassy, constructed from a series of interconnected rooms laid out on a grid pattern. Higher levels have more rooms, and therefore a larger play area. As well as hand-to-hand combat (achieved by directional pad left and right or up and down when the spies are in proximity to each other) the spies can place traps on the furniture and doors which occupy the playing area. These traps are triggered when a spy searches a piece of furniture for an item or opens a booby trapped door, resulting in a cartoon style animation showing the subject being shot, blown up, etc, and floating up to heaven as an angel.

Strategy is introduced by limiting the quantity of each trap a spy can use, and by allowing the traps to be triggered by either spy. Some pieces of furniture also contain 'remedies' which match up to specific traps - these allow a trap to be defused, but can only be fetched one at a time.