
If the player does not die, being defeated means a loss of all troops travelling with the player. The main gameplay challenge in King's Bounty: The Legend is one of finite resource management, with the main resources being gold, troops and magic crystals.

By allocating runes received as treasure or after gaining a level, players choose which skills to focus on. Each class specializes in one of the three skill trees in the game, although players are allowed to cross-specialize. King's Bounty: The Legend allows players to play as one of three different character classes, from the choices of Warrior, Paladin, and Mage. Treasures and other items can be picked up by directing the player's character towards them, and non-hostile characters can be interacted with by similar means, usually to make purchases or as part of a quest. Otherwise, players are free to move throughout the various game locations while day and night slowly cycle, without any concept of turn-based play. Hence, enemy groups shown on the map will move towards the player if close enough, initiating combat if they touch the player's avatar. While not in combat or visiting a specific location, players move on the overworld map in real-time, although with the ability to pause. In combat, troops are then assisted by the player's character through the use of magic (spells and scrolls), Spirits of Rage and passive bonuses. Troops are recruited from various locations in the game, with a limit on the maximum size of each unit determined by the character's "Leadership" statistic.

These range from the mundane (e.g., peasants or archers) to creatures from high fantasy (e.g., griffins, beholders or ents), and can vary in size from just a single unit all the way up into the hundreds. The player's character cannot directly fight in battles, but rather employs up to five squadrons of allies to do so. The king provides the main story quests, but there are numerous side quests which can be completed as well, in virtually any order. After a brief "final exam" tutorial at the School of Knights, the player receives some basic troops and is then set free to pursue whatever quests are desired.

In King's Bounty: The Legend, the player plays as a hero in the world of Endoria, sworn to serve the king of Darion.
