PaRappa the Rapper is a rhythm-based game where the protagonist, PaRappa, progresses through six stages by rapping. During each stage, a bar at the top of the screen shows symbols that match the lyrics of the teacher’s rap. The player must then press the buttons in time with the teacher’s rap to make PaRappa respond correctly.

The player’s performance is tracked by a “U Rappin'” meter, which can rank their performance as Awful, Bad, Good, or Cool. To maintain a good performance, players need to stay on beat. If a player messes up, their ranking will drop, with two consecutive bad performances lowering it to Bad or Awful. To improve, players need to perform well twice in a row to raise their ranking. To clear a stage, the player must finish with a Good rank. If the player drops below Good (to Bad or Awful) at any point during the song, they will fail and must restart the stage.

Once the game is completed, players can attempt to reach the Cool ranking by performing freestyle raps that differ from the preset lyrics. If the player’s freestyle impresses when the Cool rank flashes, they enter Cool mode, where the teacher leaves the stage, and the player can rap freely to earn large points. However, if the freestyle fails twice in a row, the teacher returns, and the game resumes at the Good ranking. Ending a stage in Cool mode triggers a special level conclusion, and completing all stages in Cool mode unlocks a bonus mode featuring the characters Katy Kat and Sunny Funny.

The ranking system only affects the first of every two lines in each stage. If the player hits the timing on the first line but fails the second, the meter will not drop to Bad or Awful. Once the game is cleared, performing well on the first line of each pair is enough to trigger Cool mode on the second line.