Phantasy Star Universe can be considered the sequel to Phantasy Star Online with hack-and-slash RPG gameplay. Once again, there are two components: both offline and online content. In the offline single-player story, the 17-year old Ethan Weber is a military cadet on a mission to save his kidnapped sister from a mysterious force called THE SEED. This events and characters complement the online gameplay. Additionally, there is an offline mode that plays similar to the online mode, with character customization.

In the online MMORPG component, players create their character based on four races: Humans, CASTs, Newmans and Beasts, with 3 main classes that can still be changed during gameplay. Once at a high level, there is further specialization with 7 advanced classes. The character's customization includes the clothes, hair, facial features, voice, and body proportions.

The game takes place in the Gurhal Star System, with three planets to explore. Players can also team up in squad-based combat and tackle over twenty massive dungeons. The movement options of the previous game have been improved, with enhancements such as strafing. Characters can wield different weapons for each hand and there are player-controlled vehicles. A monthly fee is required to keep playing.