The gameplay of Bad Dudes is roughly similar to the 1985 Konami side-scrolling arcade game Rush'n Attack and the 1984 side-scrolling beat-'em-up Kung Fu Master, but allows up to two players to play at once. Player One controls the character named "Blade" wearing white pants and Player Two controls the character named "Striker" wearing green pants. Players start with the ability to do basic punches, kicks and jumps. Some moves are special like spinning kicks and the ability to charge themselves up with "inner energy" (Qi) by holding the punch button to throw a powerful long-range attack that hits all opponents in front of the player. Players will also come across several power-ups; some are weapons like knives and nunchakus and some recharge a player's health, and yet others add a few seconds to the remaining time. The various types of enemies encountered in the game have their own means of attack. The basic blue-colored ninja directly charge the player, while some leap with their swords, or throw shuriken and makibishi; there are also acrobatic kunoichi female ninja, attack dogs, and even people who are on fire. The enemies may be beaten down or avoided. Most enemies can be beaten with only a single hit of any kind, and multiple enemies can be defeated with one hit if they are standing close together. At the end of each level, one of the "super warrior" bosses will appear which needs to be defeated to progress to the next level. The first of them is Karnov, who cameos from the Data East game of the same name; the background music during the fight with him is similar to the main theme in Karnov as well. Each boss has their own special attacks: Karnov, for example, can breathe fire at the player. At the successful completion of each level, the dude(s) strike a "bad" pose and proclaim, "I'm bad!". The shout, and the game's American wordmark logo are both similar to the Michael Jackson song "Bad" released the previous year. In the Japanese version of the game, this quote was originally a battle cry.