Cosmic Smash is a fusion between Squash and Breakout. The player serves the ball, with the objective being to break all the bricks in the stage. The player must continue the volley, allowing to put spin on additional returns, allowing the ball to move behind bricks to clear them out more quickly, a common Breakout strategy. This strategy is essential in later stages, with moving as well as indestructible bricks.
Upon completing a stage, the player moves through a void with an overhead map with the appearance of a train network. At certain points the player can choose to move left or right at a junction, this is similar to Sega's previous game Outrun, allowing the player to take different paths to end up at the final stage.