The object of the game is to rescue the five hostages in the concentration camp. The game is divided into six stages: Communication Setup, Jungle, Village, Powder Magazine, Concentration Camp, and Airport. Completion of each stage advances the story. For example, upon completing the Jungle stage, an enemy leader is interrogated and the location of the enemy's concentration camp is found. This was one of the first shooter games to feature a storyline, and it had some similarities to real special operations missions.

The game is controlled with a positional gun controller attached to the cabinet, with force feedback to simulate recoil. In order to complete each stage, the player must shoot as many soldiers, tanks, jeeps, choppers, and boats as the game requires. Soldiers can throw hand grenades and knives, and vehicles can shoot missiles and launch rockets. The player's ammunition and grenades are limited, but can be stocked up by shooting barrels and crates or by shooting animals such as chickens and pigs. Occasionally a high-powered machine gun power-up appears, allowing the player's gun to have unlimited ammo and an increased rate of fire for 10 seconds.

The player has a damage bar that increases each time they are hit. The damage bar also increases upon shooting a civilian or hostage. Energy boost items randomly appear which, if shot, decrease damage by five points. Once the bar reaches maximum, the game is over.

One of the most ported arcade games of all time, it has seen releases on everything from the CPC to DOS, as well as the NES, and TurboGrafx-16. Most of these ports lack any kind of light gun support and must be played with a keyboard or a controller.

In 2005, Operation Wolf was released on the Xbox, PlayStation 2, and Microsoft Windows as part of Taito Legends; however, light gun support is unavailable. On February 4, 2008, the NES version of Operation Wolf was released on the North American Wii Virtual Console. Whereas the NES version allowed NES Zapper support, the VC re-release doesn't feature any kind of light gun support (including the Wii Remote's pointer functions), making the game only playable with the standard controller mode.

The objectives were as follows:

• Communications - Destroy the enemy communications unit in order to isolate them. Until this stage is completed, the number of enemies in all the other stages goes up by 5 each time you finish a stage. (Since this is the first stage in all but the Japanese versions, this effect was rarely seen outside of Japan.)
• Jungle - Capture the squad leader and learn of the concentration camp's location. You are to repel the ambush, but avoid collateral damage as civilians are in the jungle as well. The climax of the stage on the NES version and several other ports involves an enemy soldier holding a woman hostage by threatening to shoot her. Until this stage is completed, you cannot select the Concentration camp stage.
• Village - Enemy forces are in control of a village that is presumably unsympathetic to what they are doing. Your mission is to attack the enemy forces and cause them to retreat from occupying the village. Successfully completing the stage means the villagers perform medical treatment on you and replenish your health as a reward. If this stage is not completed, the Airport stage will start with two extra tanks.
• Ammunition dump - The mission is to destroy the ammunition dump in order to starve the enemy of firepower (and steal some for you). You do so at the end of the stage, but not before confiscating grenades and clips of ammunition for yourself. If this stage is not completed, the Airport stage will start with two extra helicopters.
• Concentration camp - Eliminate the enemy forces guarding the camp in order to permit the hostages to escape. In addition to being careful to not shoot the hostages, you must also be careful not to destroy enemy vehicles too close to the hostages, as the shrapnel could also kill the hostages. You can still finish the level after killing all the hostages, but the game then ends (if continue is enabled on the machine, continuing triggers a strange bug where the level instantly finishes, and another game over occurs -- but the second continue behaves normally). Until this stage is completed, you cannot select the Airport stage.
• Airport - You must get the hostages (and yourself) to successfully escape. As in the previous stage, the hostages cross the screen and you must see to their safety. The stage is completed by boarding an airplane which returns you to the United States. A final, heavily armed helicopter will try to shoot the plane down after all other hostiles are terminated and must be destroyed to finish the stage.