The player must be grabs treasure guarded by a dragon whilst avoiding fireballs.
Each level of Dragon Fire consists of two stages. The first stage is a side view of the character trying to cross a drawbridge to reach a castle. To traverse the bridge the player must duck under high fireballs and jump over low fireballs (or perform the improbable-looking kneeling jump). Upon success the second stage begins which has a more top-down point of view and wherein the player must guide the character around the room collecting treasure and dodging more fireballs spewed by a dragon that patrols the bottom of the screen. Every piece of treasure in the room must be collected in order for a door to appear which takes the player to the next level. A single hit from a fireball in either stage will deplete one of the player's seven initial lives. Gameplay in each level is identical except that the character and fireballs get progressively faster.