The Evil Within is an action survival horror game that draws inspiration from the Resident Evil series with a grimy look with exaggerated gore. The player controls detective Sebastian Castellanos who is called to a crime scene of multiple homicides at the Beacon Mental Hospital together with his partners Joseph Oda and Julie Kidman. When they arrive they find all police cars abandoned and almost everyone killed in a gruesome way. When reviewing security footage he spots a hooded man called Ruvik. The next moment the man is behind him and Castellanos blacks out. He wakes up in a world he does not recognize where he is held captive in the basement of a large, chainsaw-wielding man. After escaping he investigates what has happened in sixteen chapters set in different locations.

As a survival horror game Castellanos is often outnumbered, enemies are strong and supplies are scarce. Many confrontations can and should be avoided through sneaking. Enemies have an awareness level and can be lured away by throwing a bottle. Eye icons show when an enemy is nearby or has been alerted. A lantern is used to light dark areas. There are environment based puzzle elements involving items and notes, and small stone statues can be destroyed to find keys to open item lockers. Castellanos can perform melee combat and uses regular weapons such as a revolver and a shotgun, as well as grenades. Once the agony crossbow is discovered, multiple possibilities are opened up to take out enemies, for instance by freezing or poisoning them, or by creating harpoons or lightning traps that stun. Health can be replenished through a limited amount of syringes and matches burn defeated enemies, permanently killing them.

The camera hovers closely behind Castellanos. Many level parts offer multiple approaches, with the ability to silently sneak or to hide. While exploring jars of green gel can be picked up that act as upgrade points. By staring into a mirror Castellanos is transported to an asylum in his imagination. There the game can be saved and it has a chair where he sits down to upgrade weapons and abilities with up to five levels. Points can be spent to improve weapons with a damage multiplier, faster firing rate, shorter reload time, large clip capacity, improved accuracy or a larger chance for critical hits. You can also make more room for ammo or items, or use points to upgrade physical abilities such as more health, extended sprint time, more melee damage or large syringe recovery.

There are traps and bombs in the environment that can be disarmed to earn trap parts, used to craft crossbow ammo. Traps can also be left in a strategic way to limit the number of directions enemies can attack from. Enemies include animals, regular 'haunted' enemies, and a number of grotesque creatures. There are also boss fights. There are three difficulty levels.