The player takes control of either Kage, the ninja from the first game (armed with katana and shuriken), or Chihiro, a kunoichi from Iga raised by Hanzo Hattori (armed with kusarigama), both loyal to the shogun Ieyasu Tokugawa. Their mission is to rescue princess Kirihime, who was kidnapped by the demon-controlling villain Yoshiro Yukikusa and his right-hand ninja Yukinosuke Kiri in their attempt to overthrow the early Tokugawa shogunate.
Kage and Chichiro each have a personal story and 17 different ninjutsu techniques to master. They have skills such as abilities to climb vertical cliffs, hanging from ceilings, and blocking enemy attacks with the sword (which could also be done in the original game). The game introduces ninpo skills such as Bunshin no Jutsu, a technique that creates deadly duplicates of the player. Mastering ninjutsu will enable players to launch powerful elemental attacks and summon monsters.
Critical reception has been mixed. The Legend of Kage 2 has been noted for its difficulty, which was reported to rise considerably after the first level. The game has also been praised for the well-designed boss fights, and crisp, vivid art, but was also criticized for the lack of detail in the environments. The controls have been reported to have minor problems such as being unable to jump immediately after an attack. The story has also been criticized for straying from the original source material, as well as its lack of voiceovers and repetitive level layouts.