A fighting game featuring characters from various Capcom and SNK games. Enhancing the main gameplay feature of Capcom vs. SNK, "Grooves", sets of gameplay mechanics from Capcom or SNK games selectable before battles, have now been made more granular. Compared to the previous two, there are six grooves in total, three for each company, plus Groove Edit Mode, where the player may define a custom groove.

In the Japanese GameCube and Xbox releases, the "EO" acronym means "Easy Operation"; in the European releases it means "Extreme Offence". Both refer to EO mode, an optional easy-mode added in this edition, which causes right analog-stick directions to instantly execute moves that usually require a series of inputs.