An updated sequel to Street Fighter III: New Generation, 2nd Impact updates the roster with three new playable fighters (including Alex's rival Hugo and minor antagonist Urien), revamps the stages and soundtrack, and adds a new gameplay mechanic: enhanced special moves (known as "EX Special Moves").
Rather than following up on the story of New Generation, the game's story is instead an update on it, with most endings remaining the same. It mostly focuses on a World Warrior Tournament hosted by Gill, the leader of a mysterious organization.
Along with a sequel (Street Fighter III: 3rd Strike - Fight for the Future), the game was later ported to the Dreamcast alongside New Generation as Street Fighter III: Double Impact (Street Fighter III: W Impact in the Japanese version) in Japan on December 16, 1999, in North America on June 19, 2000, and in Europe on September 15, 2000. It was later included in the Street Fighter 30th Anniversary Collection compilation on May 29, 2018.
Much of the gameplay from Street Fighter III: New Generation remains the same, with some new additions:
- EX Special Moves, which use up a portion of the Super Art Gauge to enhance the properties of that special move. It is performed using the same command as the normal special move, but with an extra punch button (for commands with a punch button) or extra kick button (for commands with a kick button).
- Personal Actions, performed by pressing both Heavy buttons (HP+HK) are taunts that grant character-specific benefits (such as temporary bonus damage or recovered stun gauge) if it is uninterrupted.
- Throws can now be escaped by performing a throw of their own.
In addition, the single-player mode includes a new bonus stage where the player must parry against a series of thrown basketballs.
- Hugo - A professional wrestler from Germany who seeks a strong tag-team partner for an upcoming wrestling tournament. He was originally from the 1989 game Final Fight (under the name Andore) and is accompanied by his manager Poison (also from Final Fight).
- Urien - Gill's younger brother, seeking to usurp his brother's leadership of their organization. Somewhat of a playable "palette swap" of the game's main boss character, he can manipulate the other two classical elements: electricity (air) and metal (earth).
- Akuma (Gouki in the Japanese version) - A mysterious and powerful martial artist. Similar to his original Super Street Fighter II Turbo appearance, he is the game's hidden boss and takes the place of the boss battle when certain conditions are met. If he is defeated under certain conditions, he re-challenges the player in his true "Shin" form. His normal form is playable with cheat codes, while his "Shin" form is only playable in the Dreamcast version with cheat codes.
- Alex - A professional wrestler from the U.S.A. who seeks to avenge the defeat of his mentor. He is seen as the game's main protagonist.
- Yang - A kung fu expert from Hong Kong and the younger twin brother of Yun. While he was a simple hidden "palette swap" in the first game, he was given his own movelist and character slot in this game.
- Necro - A mutant cyborg from Russia who seeks revenge against Gill's organization for experimenting on him.
- Oro - An ancient, mysterious hermit who mastered the secrets to immortality. He enters the tournament to seek potential candidates to teach his unique fighting style.
- Ibuki - An aspiring ninja from Japan who is sent by her clan to retrieve a mysterious file from Gill's organization.
- Elena - A tribal princess from Kenya who seeks to travel the world, using her elaborate capoeira in battle.
- Ryu - A wandering martial artist from Japan who seeks worthy opponents to improve his skills.
- Ken - An experienced martial artist from the U.S.A. who seeks to test his strength against his friend and rival Ryu.
- Gill - Final boss and only playable in the Dreamcast version. Leader of a secret organization that seeks to turn the world into his own utopia.