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Players take control of both Peter Pan and Tinkerbell in Disney's Peter Pan in Return to Never Land, a two-dimensional adventure for PlayStation. A treasure is hidden somewhere in Never Land and the despicable Captain Hook has shredded the map and thrown it away in hopes that Peter Pan will never find the treasure. As players explore the five regions of Never Land, they must search for the pieces of the map while avoiding enemies and traps.

Hangman's Tree, Mermaid Lagoon, Pirate's Cove, Indian Village, and Skull Rock are the regions available to explore, and clearing one level opens another. Besides the various levels, the regions also contain bonus areas and hidden levels. As Peter Pan and Tinkerbell search for the map pieces, they encounter hazardous gulls, chopper fish, sword-swinging pirates, explosive barrels, and sharp-edged sword stars that spin like fan blades. Avoiding the hazards of Never Land while piecing together the map that reveals the hidden treasure, Peter Pan and Tinkerbell can also collect feathers, life-repairing hearts, and pixie dust.

In the Indian Village region, there is an Indian Shop where players can spend points awarded from the collection of feathers. Items for purchase in the shop include tips and hints, life bonuses, pixie dust, a secret chest, and you can also view movie clips with the use of bonus tickets and film reels. Progress can be saved at the end of each level, marked by a skull totem.