Splatterhouse is a sidescrolling beat 'em up video game in which the player controls Rick, a parapsychology student who is trapped inside West Mansion. After his resurrection by the Terror Mask, Rick makes his way through the mansion, fighting off hordes of creatures in a vain attempt to save his girlfriend Jennifer from a grisly fate. Players of this game will also recognize a number of western horror film influences, such as Friday the 13th and Evil Dead 2. Similar to many sidescrolling beat 'em up games, Rick can only move in a two-dimensional environment. The playing field does not feature a three-dimensional area, a feature that was added later in the series with Splatterhouse 3. He has the ability to jump and can punch and kick. Rick also has a Special Attack, where he will perform a drop kick that sends him skidding along the ground, damaging any enemies he hits. Rick can also perform a low kick, low punch, and jumping attacks, as well as pick up and use various weapons placed in the levels. All of the levels consist of walking left to right, with occasional auto-scrolling segments. However, alternative pathways through sections of the house are possible by falling down through holes or jumping up onto ladders. In this way, branching gameplay is possible, if only prevalent in the middle levels. Levels culminate in boss fights that take place in a single room. Unlike traditional side-scrolling fighters, boss fights have varying objectives and styles. Unlike most arcade games in the genre, Splatterhouse sends players back to checkpoints after losing lives or reaching game over, discouraging "credit feeding" as a method of overcoming the various challenges.

Two college students, Rick Taylor and Jennifer Willis, take refuge from a storm in West Mansion, a local landmark known as "Splatterhouse" for the rumors of hideous experiments purportedly conducted there by Dr. West, a renowned and missing parapsychologist. As they enter the mansion and the door shuts behind them, Jennifer screams. Rick awakens in the dungeon of the mansion to discover that he is still alive thanks to the influence of the "Terror Mask", or in some versions, the "Hell Mask", a Mayan sacrificial artifact from West's house which is capable of sentient thought. The mask attaches itself to Rick, fusing with his body and transforming him into a monster with superhuman strength. With the mask's encouragement, Rick goes on a rampage through the dungeon and the mansion grounds, killing hordes of monsters. Inside the mansion, Rick finds Jennifer, prone on a couch and surrounded by a throng of creatures that retreat upon his arrival. After their departure, Jennifer transforms into a giant, fanged monster that attempts to kill Rick while begging him for help. Rick is forced to kill Jennifer, who transforms back to normal and thanks him before she dies. Infuriated, Rick tracks the remaining monsters to a giant, bloody hole in the mansion's floor. Upon entering it, Rick discovers that the mansion itself is alive. He follows a bloody hallway to the house's "womb", which produces fetus-like monsters that attack him. Rick destroys the womb, which causes the house to burst into flames as it "dies". Escaping the burning mansion, Rick comes across a grave marker. The Terror Mask releases energy into the grave, reviving a giant monster named "Hell Chaos" that claws its way up from the earth and attempts to kill Rick. Rick destroys the creature, which unleashes a tormented ghost that dissipates into a series of bright lights. As the lights vanish, the mask shatters, turning Rick back to normal, and he flees as the house burns to the ground and the credits roll. However, after he leaves and the credits end, the Terror Mask reassembles itself and laughs evilly, staying there for 45 seconds, with the word "END" appearing on the bottom right corner of the screen.