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The Elder Scrolls: Arena is a first-person action role-playing game, in which you must rescue the Emperor Uriel Septim VII from his dimensional prison by recovering the eight pieces of the Staff of Chaos. The emperor's position has been usurped by impersonator Jagar Tharn whose slain apprentice rallies the player in his dreams to find the eight pieces of the staff and return the status quo.

It is the first chapter in the Elder Scrolls series and the first game that is set in the fictional world of Tamriel. Unlike later games in the series the player can travel through almost all of Tamriel, instead of being restricted to certain provinces. There are over 400 cities, towns and villages to explore, tons of magical items and heaps of spells to create. The player can walk endlessly in any direction as more and more land will be procedurally generated. Walking manually however never allows the player to reach other cities; the fast travel feature must be used for this. The player is free to go where he or she wants. The story itself is resolved in a linear fashion, although the locations of items is randomly determined at the start of the game.

Melee combat is performed through mouse gestures and spells are cast using a menu interface. The player controls only a single character, which happens in real-time. In the wild and in dungeons the player can expect opposition from enemies which need to be defeated and who drop loot. In the cities NPCs can be found, some will barter or provide other services to the player.

The CD-ROM release features speech in cutscenes and additional rendered sequences that the floppy version does not include.