NightCaster II continues the adventures of a magic-user named Arran as he calls upon his mystical talents to combat a new threat to his world. As in its 2002 predecessor released by Microsoft Game Studios, NightCaster II features a dual analog control system for aiming a targeting cursor independently of movement. By selecting spells from four different schools of magic (Light, Dark, Fire, and Water), players can more effectively vanquish certain monster types. Arran now wields a halberd instead of a staff for melee encounters, but his skills are still best suited for casting spells.
For the first time in the series, two characters can fight alongside one another as Arran and a female warrior named Madelyn team up for cooperative play. While Madelyn can also use magic, her strengths lie in weaponry and melee attacks. As in the original NightCaster, players navigate their environments from an overhead perspective while fighting numerous monsters that attack from all sides. New to NightCaster II are combat bonuses or style rewards given to players who perform such skills as killing three or more creatures in one spell or melee attack, killing all water-based monsters, and so forth.
Achieving these feats grant players a temporary boost in attributes or bonus experience points for each enemy vanquished. Experience points are used to level-up characters, and players can control their character's development in fortitude, prowess, knowledge, health, and mana distribution. Music once again dynamically changes based on the player's location in the 3D environments, becoming more subdued when there are no enemies in view and heightening the mood as battle occurs. NightCaster II is the first Xbox release from Jaleco Entertainment, a company formed in 2002 by the merge of developer VR-1 and publisher Jaleco USA.