Dungeons of Daggorath is a dungeon crawler which has rudimentary magic, character building, and combat elements, like a Wizardry-style RPG, while also using a text parser like a graphic adventure. The top part of the screen is dominated by a first-person view of the dungeon, while the player enters his/her commands at the bottom. Verb recognition includes commands such as MOVE, TURN, USE, ATTACK, STOW, and INCANT.
The game contains five levels of dungeon to explore, and more and more powerful monsters the deeper the player character advances. Some monsters of the same type get stronger as well - for example, the troll starts on level one armed with a club, but on later levels he gets more powerful with an axe. Other features include different levels of torches that affect viewing distance and eventually wear out; monsters generating different sounds that grow louder or fainter as they get closer to the protagonist (even if they cannot be seen behind walls); and the real-time aspect of the heartbeat. If the player character is injured or running too fast, his heart rate increases, and he may pass out if the player pushes too far. During that time, monsters would keep moving and attacking.