The Ultor Corporation of Mars is successful because of the mineral wealth of that planet. It employs a number of miners and scientists to mine the Noachite ores far underground. The miners are constantly pressured by the guards to work harder and faster, while at the same time being forced to share their meager resources. While the mines itself are dangerous, so too is the mysterious plague that has broken out among the ranks of miners, killing many. Into this low morale situation, propaganda against Ultor has begun appearing, signed only by "Eos". These pamphlets and posters urge the miners to rise up against their oppressors and take a stand, also recruiting members into their secretive "Red Faction". As a result of Eos' efforts, tensions are rising high between the Ultor corporation and its workers, any little incident could ignite...

Red Faction is a first-person shooter. Players take the role of Parker, a miner working underground for the Ultor Corporation. Equipped in an environment suit, Parker is protected from various hazards and able to breathe deep in the mines and in airless locations. At times, Parker also needs to travel undercover in a less protective disguise. Parker defends himself with a variety of weapons, most of which feature a primary and secondary firing mode. The weapons are divided into: hand weapons such as riot shields and flamethrowers, light arms which include pistols and shotguns, heavy arms featuring rocket launchers and sub-machine guns and finally weapons that are thrown or placed such as grenades and explosives. The game features a variety of vehicles to drive in first-person; including jeeps, drillers, flying craft and submarines. In order to survive, Parker must link up and aid his fellow miners, receiving direction and objectives via com-link messages.

Red Faction features a game engine called Geo-Mod. It allows holes to be blasted into all manner of terrain including floors, walls and ceilings. While limited to certain surfaces, such as rock, ice and concrete, this nonetheless results in a more destructible environment where deviation from the level design is encouraged. Players are able to at multiple points, create their own paths, tunneling past obstacles and into new environments. Only heavy explosives; such as missiles, torpedoes, grenades and plastique will allow the terrain destruction of this sort.