Banjo-Pilot is a kart racing game featuring characters and environments from the Banjo-Kazooie series of platform games. It plays similarly to the Mario Kart series by Nintendo: the player, controlling a character in their vehicle, must race opponents around tracks. The player views the gameplay from behind the character's back, and must manoeuvre their character throughout the race. All races are three laps long and feature elements that confer advantages, such as offensive power-ups. Collectible, golden music notes, an element from the Banjo platformers, are scattered around tracks as well. Banjo-Pilot is distinguished from other kart racing games because the player controls airplanes instead of go-karts, allowing them to move up and down. However, the planes do exhibit behaviours normally associated with karts, such as slowing down over rough ground. The planes are equipped with bullets that can be shot at other players; they can also do a barrel roll to avoid attacks from others. The game features a total of nine player characters; Banjo, Kazooie, Mumbo Jumbo, and a purple Jinjo are initially available, while Humba Wumba, Gruntilda, Klungo, Bottles, and Jolly Roger can be unlocked through gameplay.

The game features 16 tracks accessible through four different game modes for a single-player. In Grand Prix, players race opponents through a series of four consecutive tracks and earn points based on their finishing position. At the end of Grand Prix, players must participate in a Champion Challenge-an aerial dogfight against a boss. Jiggy Challenge retains the emphasis on collecting items from the Banjo platformers: the player must look for and collect puzzle pieces called Jiggies for points while racing Bottles the mole. Quickrace allows the player to choose from any of the game's tracks to race on, while time trial challenges players to finish a course in the fastest time possible. The game also features multiplayer modes for up to four players: a multiplayer version of Grand Prix, a one-on-one race, and a dogfighting game. Competing in races will earn players "Cheato pages", loose book pages which serve as a form of currency. How many they earn is based on their race placement and how many musical notes they collect. These pages can be given to the anthropomorphic book Cheato in exchange for various bonuses, such as new game modes and characters.