A group of humanoids known as the Sentinels plan to to rid the world of mutants. The X-Men must ally with their greatest enemies in order to save their teammate - Forge. The mutants must save Forge before the Sentinels can coax secrets from him that are capable of destroying all mutant-kind.

X-Men: Next Dimension is a fighting game in which the player can choose between up to twenty-four available characters. The game features an extensive combo system, including normal chains, air juggles, and air launchers. Beside the basic blocking system, characters have various counter-attacks available, specific to the type of attack the player is countering. In addition to standard attacks, the player can execute super attacks by pressing two punch or kick buttons simultaneously. These include blasts or beams, some of which can stun an opponent, as well as physical attacks that have special effects. There are several different types of super attacks, each having four different levels of power.

The stages are rendered in 3D; unlike in most fighting games, many stages consist of multiple screens. The player can choose to move between these screens; kicking the opponent out of the current screen also leads to a location change.

Most of the versions include the following modes:

• Story Mode - the player follows a scripted mode; only several of the characters are available to control.
• Arcade Mode - a one-player mode where the player fights against the AI in a series of ten matches.
• Versus Mode - a two-player game for one-on-one combat.
• Survival Mode - a one-player game where the player tests his skills against a never-ending series of enemies, achieving as many victories as possible with only one life bar.

The GameCube version contains two exclusive modes, Team and Practice. The Xbox version features an extra stage and the ability to play as Pyro.