The player assumes the role of a hero, fighting monsters while traversing over land and dungeons. The storyline of Diablo II is played through four acts. Each act follows a predetermined path with preselected quests, although some quests are optional. Each act culminates with the destruction of a boss monster, upon which the player proceeds to the next act. Battle is conducted in real-time, using an isometric oblique top-down viewpoint (basically, this just means that the game has a set, hovering camera angle, a viewpoint often called "2.5D" because it is between 2D and 3D). Players fight monsters to level their character up and gain better items.

Diablo II emphasises combat, and randomly generates many monster properties, level lay-outs and item drops. Most of the maps themselves are randomly generated. In single player mode, the map is randomly generated but locks the setting thereafter; in multiplayer mode, it resets every time the dungeon is restarted.

Diablo II allows the player to choose between five different character classes: Necromancer, Amazon, Barbarian, Sorceress and Paladin. Each character has different strengths and weaknesses and sets of skills to choose from.

In addition to the four acts there are also three difficulty levels: Normal, Nightmare and Hell. A character must complete these difficulty levels in order; only once a character completes normal difficulty can that character play at nightmare difficulty, and similarly for hell difficulty. Each difficulty is a greater challenge than the last, with such features as increased creature difficulty, experience penalties upon death, and other challenges. A character retains all abilities, equipment, etc, between difficulties, and may return to earlier difficulties at any time. Upon completion of the game in normal difficulty, a player may create a hardcore character. While for normal players the game doesn't end when they die (as they can simply resurrect in that act's base of operations), the game ends when a hardcore character is killed.

Diablo II also has a number of other features that enhance gameplay. The player has the option of hiring one of several computer-controlled mercenaries, that follow the player and attack nearby enemies. On occasion, the player might find a rare, valuable item, or one that is part of a set that becomes more powerful when the entire set is collected. Items can be customized using sockets and gems, or transmuted into different items using the Horadric Cube.