The objective of Dig Dug is to eliminate underground-dwelling monsters, either by inflating them with an air pump until they explode or by dropping rocks on them. There are two kinds of enemies in the game: "Pookas" (a race of cute round red monsters, said to be modeled after tomatoes, that wear yellow goggles) and "Fygars" (a race of green dragons that can breathe fire when their wings flash).

The player's character is the eponymous Dig Dug, dressed in white and blue and able to dig tunnels through dirt. Dig Dug will be killed if he is caught by either a Pooka or a Fygar, burned by a Fygar's fire, or crushed by a rock.