The Last Starfighter is based on the 1984 movie of the same name. The hero must single-handedly pilot an extraordinarily powerful starfighter to destroy an enemy armada. The action takes place in outer space from a side-scrolling perspective where the ship always remains lined up in the middle of the screen but is able to turn forwards and backwards while accelerating and decelerating. The ship can also collapse into a slimmer configuration. Enemies come at you from all directions and in all formations. Shoot them as quickly as possible while also disabling the enemy fleet's starcruisers as best you can.

The game also features a 2-player mode where each player takes turns fighting the armada.