The gameplay in Croc 2 has advanced considerably compared to the previous game. Instead of simply finding six Gobbo in each level, the player must now complete various tasks.
One of the many changed elements is the health system; instead of the extra life system that Legend of the Gobbos had, Croc now has only one life and a heart count of up to 9; each hit Croc takes, or any time Croc falls into a bottomless pit, takes away one heart; the heart count can be restored by finding heart tokens in the levels, or by collecting fifty crystals; the starting maximum count for hearts is five, the player can buy Heart Pots from Swap Meet Pete to be able to collect more hearts.
Another new aspect is Swap Meet Pete's General Store. The store is owned by a large, anthropomorphic cat, named Pete.
Pete is capable of teleporting Croc to other Gobbo Villages with the use of his Crystal Ball.
There are four villages Croc must traverse through before reaching the end of the game, each with Gobbo of different personalities. The four villages are the Sailor Village, the Cossack Village, the Caveman Village and the Inca Village. Each village has five levels, two bosses (with the exception of the Inca Village, which has only two levels, and one boss) and one Golden Gobbo level. Once the fourth village is finished, Croc then travels to Baron Dante's Tower of Power, and once the Jigsaw Puzzle Pieces are assembled, a fifth village can be unlocked; the fifth village is a corrupted version of the Gobbo village, created by Dante.
A Western-style village, featuring Cowboys and Native Americans, was planned but never finished.