Like its predecessor, players take the role of a dungeon keeper, building and defending an underground dungeon from the would-be heroes that invade it, as well as from other keepers. In the game's campaign mode, the player is charged with recovering the portal gems from each area in order to open a portal to the surface.

The peaceful Kingdom of Harmonia, ruled by King Reginald, has kept evil at bay using twenty magical Portal Gems, each guarded by a heroic Lord of the Land, sealing wicked creatures away in the Underworld. Playing as a malevolent dungeon keeper, the player is recruited by the fearsome Horned Reaper, known as Horny, to reclaim those gems and open a path back to the surface. Burrowing out sprawling subterranean dungeons, luring in monstrous minions, and laying traps, the keeper must conquer each realm in turn, defeating its guardians and any rival keepers to seize the Portal Gems.