Dr. Mario is a falling block tile-matching video game. Mario assumes the role of a doctor, tossing two-colored medical capsules into a medicine bottle representing the playing field. This area is populated by viruses of three colors — red, yellow, and blue — which stay in their starting positions until removed. In a style similar to Tetris, the player manipulates each capsule as it vertically falls, able to move it left or right and rotate it 90 degrees clockwise or counter-clockwise. When matching colors of capsule halves and viruses touch sequentially 4-in-a-row, they disappear. Any remaining half or whole capsules which are not supported will fall to the bottom of the playing field or until hitting another supported object, and any new 4-in-a-row alignments also disappear. The main objective is to eliminate all viruses from the playing field, finishing each level. A game over occurs if capsules fill the playing field in a way that obstructs the bottle's narrow neck. After each 5th level is completed on Medium or High difficulty, up to level 20, a cutscene shows the virus trio sitting on a tree as music plays and an object flies across the screen.

The options screen configures the starting level, game speed, and music. The player chooses a starting level between 0 and 20 that determines the number of viruses to clear, and one of three speeds of the falling capsules. The player's score is based on the elimination of viruses and the chosen game speed, with bonus points for clearing more than 1 in a single line.

Dr. Mario offers a multiplayer gaming mode in which two players compete in separate playing fields. Each player's goal is to clear the private playing field of viruses first. Eliminating multiple viruses or initiating chain reactions can add capsules to the opponent's playing field. A player wins a single game upon eliminating all the viruses or upon the other player's bottle filling. The first player to win three games wins overall.