In contrast to the other Sonic games released for the Sega Genesis, which were 2D sidescrolling platformers, this game is played from an isometric viewpoint in a 2D environment and uses pre-rendered 3D sprites, displaying pseudo-3D graphics.

In the game, Doctor Robotnik discovers mysterious birds called flickies that live on an island in an alternate dimension. He learns that they can travel anywhere using large rings, so he decides to exploit them by turning them into robots to help him search for the Chaos Emeralds. Sonic must find and destroy these robots located around the zones, and bring the flickies inside them to large rings. Once he collects all five flickies from each section of an Act, he is either further advanced into the Act, or taken to the next Act. Every Zone has three Acts, two involving standard levels, and the third Act consisting of a boss fight against Robotnik, without any flicky-collecting involved.

If Sonic or the following flickies are hit by an obstacle or enemy, the flickies will scatter. Each individual flicky's colour determines its behaviour. Blue and pink/orange flickies make an effort to find Sonic, while green and red flickies wander off at random; the latter even jumping about, making them harder to re-collect.

As with previous Sega Genesis Sonic games, Sonic 3D Blast includes "special stages", in which the player collects Chaos Emeralds. Obtaining all seven Emeralds allows the player to play the final boss battle and discover the true ending of the game. To access these stages, the player must find one of Sonic's friends Miles "Tails" Prower or Knuckles the Echidna hidden within a level, and stand next to them with at least 50 rings collected. Doing so allows the player to exchange the rings in order for the chance to play the game's special stage.

There are three different versions of the special stages among the different versions of the game, but all of them involve the same basic premise as the special stages from Sonic the Hedgehog 2. The camera shifts to behind Sonic as he runs down a preset path and must collect rings while avoiding obstacles that, when run into, make him lose rings. A certain number of rings need to be obtained at certain checkpoints to continue through the stage, and ultimately be able to make it to the end in order to receive a Chaos Emerald. The Saturn version of the game uses polygonal 3D graphics for the special stages, as well as navigating on a half-pipe structure. The PC version has the same gameplay as the Sega Saturn version, but uses sprites instead of polygonal graphics. The Genesis version of the game used 3D rendered sprites and has Sonic run on a flat bridge, with themes of sky and lava. If all seven Chaos Emeralds are collected, the Special Stages can still be played for extra lives. Collecting all seven Chaos Emeralds is the only way to reach the "Final Fight" level, consisting of the final boss fight and the good ending of the game.