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Virtual-On is set up similar to a Versus fighting game. Two Virtuaroids (Mecha) face each other on a stage. The player(s) use a variety of firearms, explosives, melee weapons, and other techniques to destroy the enemy for a set number of rounds, usually a single battle, or best two out of three rounds, like fighting games. The game is made to be played with a two-joystick setup, known as the twin-sticks. Each stick is equipped with a trigger and a button on top of the stick.
The game is set in a dystopian future in which Earth is controlled by corporate syndicates. People eager to break free of their rule colonize other planets. On one of these colonies is discovered a powerful technology used by an extinct race. One of the corporate syndicates, DN, reverse-engineers the technology and uses it to design battle robots called Virtuaroids. While testing this new technology, the central computer at the test complex becomes self-aware and activates the Sun Cannon, intending to use it to destroy civilization. DN assigns their top personnel to take control of several Virtuaroids and use them to shut down the rogue computer.
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