Kung-Fu: High Impact is the successor to Kung-Fu: Live. The game concept is largely identical, but while the first game was exclusive to the PS3 with the PlayStation Eye, this version is exclusive to the Xbox 360 and requires the Kinect peripheral to play. Just like the original game the Kinect capturing and tracking technology allows the player to star in a side-scrolling brawler. The main story campaign consists of fourteen levels, different from those in Kung-Fu: Live, where many enemies have to be defeated. The player's image, from head to feet, is shown in the game and kicks and punches are performed in real-time the way the players performs them in the room. Between levels there are comic-book like story sequences where the player's image is also incorporated by capturing a number of poses before the sequence. The plot is that the player is sucked into a Kung fu comic book.

The game recognizes jumps and blocking is also possible. A high attack is blocked by raising one arm in front of the face and a low attack by lifting one leg. Each move also propels the character forward slightly, to keep moving through the levels. Enemies block as well, encouraging the use of varied moves or jumps to get behind them. There are different special moves, for instance a power punch that makes the character travel across the entire screen by pushing out both hands while keeping them slightly apart. There is also a magic bow used to hit objects from a distance. Yellow warnings often appear for enemy moves, providing cues to dodge them by ducking or jumping. It is possible to scan custom objects to use them in the game, such as a baseball bat or a toy sword. Certain objects in the environment can be destroyed and there are pick-ups such as a mana bonus for special moves and double damage.

Next to the story campaign there are custom fights with options to choose the environment and enemies, and tweak parameters such as gravity, speed of time and movement exaggeration. There is also a tutorial and several survival modes. Multiplayer is supported for up to five players. One players is captured using Kinect and can fight four human players, controlling enemies using regular controllers.