Killer is Dead is an action game that is no sequel to Killer7 or the No More Heroes series by the same developers, but shares elements such as violent action, a main character wielding a katana as the most prominent weapon, assassins as an important theme, and a cel shaded visual style. The game is divided into 12 episodes in locations all over the world and stars Mondo Zappa as the main character. He is a contract executioner who works for the he Bryan Execution Firm. The game is set in the future and Mondo receives jobs to kill cyborgs and assassins. Before each mission a brief overview of the objective is shown against a world map and in between the fighting there are often animated sequences that further the story. Completing a main mission usually opens up several side missions.

The main character wields a katana called Gekkou with his right hand for attacks and to deflect bullets. It absorbs bloods filling up a meter, enhancing Mondo's fighting ability. Combos increase the attack speed and a moon slash can be performed as a powerful attack. His left arm has a cybernetic enhancement and it is called Musselback. Various operations can be performed with it and these require blood absorbed from enemies. It is also used to solve puzzles and discover hidden areas, with four functions for the arm in total. Mondo can turn it into a regular human hand to crack fingerprint codes or change it into a ranged sub weapon that shoots projectiles. Separate buttons are used to block and dodge. Defeated enemies leave behind body parts that recover health and blood. Yellow moon crystals are collected to upgrade skills and health gems can level up the maximum health level.

After each mission Mondo receives a payment based on his performance. It is based on statistics such as his completion score, total damage bonus, rescue payment and toughness payment, total cool kills bonus, execution time or guard break payment, along with a general rating. Upgrades through moon crystals are divided into three categories: attack skills, sub weapon skills and special skills, unlocked gradually and with a fixed progression for each type. In the main office different types of costumes for various characters can be equipped (when unlocked) and there is a gift shop where cash can be spent on various items. One of these are Mika tickets, that have his assistant Mika come to rescue when Mondo dies, providing a way to continue.

There is also a mini-game where Mondo gets to seduce women by taking pictures with Gigolo glasses. By timing when they are looking away and targeting specific areas, sexy pictures can be taken to provide moans of ecstasy and briefly remove certain clothes, and these also reveal their desires, such as the type of gifts they like. Timing is important to fill a guts gauge, because otherwise Mondo becomes nervous.