Fist of the North Star is a single-plane beat-'em-up in which the player (as Kenshiro) proceeds through the game by walking from left to right, using his martial arts of Hokuto Shinken to defeat enemies. Similarly to Kung-Fu Master, jumping is performed by pressing the d-pad upwards instead of having a dedicated button, leaving the A and B buttons solely for attacks. To enter a door, the player must press the d-pad UP while holding A and B simultaneously, which is a requirement to proceed through certain stages. In addition to the regular enemies, the player must also defeat sub-bosses and bosses to proceed in the game. Each boss in the game has a weak point that will result in massive damage if the player strikes it with the proper attack before hitting any other part of the body, along with a greater bonus after the stage is cleared.

At the start of the game Kenshiro will only have basic punches and kicks as his only available attacks, but by killing certain enemies with punches, a power-up in the shape of a star will occasionally appear where the enemy used to be. Picking up these stars will increase Kenshiro's power by up to seven levels (the white stars will raise his level up to four stars, afterward Kenshiro must switch to picking up the black stars to increase his power from five stars and onward), granting him numerous new abilities such as rapid punches and kicks, the ability to reflect enemy knives and arrows, faster walking speed, and a projectile shooting attack performed by pressing AB simultaneously while standing still (the d-pad must be on neutral). When Kenshiro reaches his maximum power level, he will rip his shirt and vest open, increasing his defenses.

Other power-ups include the flag of the Hokuto Army, which replenishes Kenshiro's life gauge, a silver necklace which grants him more "bomb" units (which is required for Kenshiro's projectile attack) and a gold necklace that grants him temporary invincibility by summoning the power of the ultimate technique Musō Tensei. Kenshiro is given an extra life for every 100,000 points achieved by the player. Shooting power can also be replenished for every 20 thugs killed by the player.