Picking up a year after the events of the first game, a new King of Fighters tournament has been announced, this time held by a mysterious new sponsor. The tournament now spans internationally, with fighters from around the world competing to be the best.
The game refines the mechanics introduced in the previous installment, this time offering a full four-button moveset consisting of two punches and two kicks. The lane system has been redesigned so that players can now knock each other into different lanes, as well as new stage hazards like electric fences or bull stampedes. Another big addition is giving every fighter a unique "Desperation Move", a powerful move that's accessible only at low health.
This game has examples of the following tropes:
- Avenging the Villain: Billy Kane seeks revenge against the Bogard brothers and Joe Higashi for the death of his boss Geese Howard.
- Big Bad: Wolfgang Krauser, the Earl of Stroheim, and organizer of the King of Fighters tournament. He seeks to battle with Terry Bogard in particular, as the latter defeated Krauser's half brother, Geese Howard.
- Clockworks Area: Billy's stage, where a power-hit can fling an opponent over into the gears for some extra damage.
- The Dragon: Laurence Blood serves this role for Krauser via being his right-hand man.
- Ship Level: Andy's stage is on a large gondola in Italy, and Mai has one on a raft.
- Shock and Awe: The electrified ropes in Axel's stage.
- Token Female: Mai Shiranui is the sole female fighter of the game, as well as the first in the series.
- Traintop Battle: Terry's stage is on a flatbed train car.
- World Tour: The new King of Fighters tournament has fighters travelling the globe to do battle with each other. This takes them all the way through the U.S.A., Italy, Japan, China, Germany, etc.
- Worthy Opponent: Krauser seeks battle with Terry specifically because the latter defeated Kruser's brother, Geese Howard.