The game takes place ten years after the events of Streets of Rage 3, in which the criminal mastermind Mr. X was finally defeated. Initially thought to be in peace, Wood Oak City falls under the control of a new crime syndicate led by Mr. X's children, the Y Twins, who are planning on brainwashing the city by using hypnotic music. Learning about this corruption, Blaze Fielding calls in some old favors to take the twins down. Joining Blaze are her old friends Axel Stone and Adam Hunter, Adam's daughter Cherry Hunter, and Floyd Iraia, a cybernetically enhanced apprentice of Dr. Zan.

Carrying on the style of gameplay from previous entries in the Streets of Rage series, Streets of Rage 4 is a side-scrolling beat 'em up in which up to four players locally or two players online fight against waves of enemies, aided by disposable weapons and item pickups. Alongside standard attacks, throws, and Blitz Moves, each character has a set of special attacks that can be performed at the cost of some health. In this game, however, players can restore health spent on a special attack by performing successive follow-up attacks without getting hit. Each character also has a unique "Star Move", which can be performed by collecting Stars in each level. A new combo system is introduced, along with the ability to juggle opponents against walls and other players, allowing players to earn extra points by stringing together long combos without getting hit.[3]

The main gameplay mode, Story Mode, sees players going through each level as the story is told, with a stage select unlocked after clearing Story Mode. Players have a limited number of lives depending on the difficulty setting, but can earn more by earning a certain number of points. If all players lose all of their lives, they will have to retry the level from the beginning, with the option to use assists that add extra lives and Star Moves at the cost of a reduced score. Upon clearing a level, players receive a rank based on how many points they scored. Points earned goes towards a lifetime score, which goes towards unlocking bonus playable characters from past games, presented in 16-bit style. The game also features Arcade Mode, which tasks players with clearing the entire game with limited lives, a Boss Rush Mode and a competitive Battle Mode, which lets two players fight against each other. The game also features a retro audio option, featuring music tracks from both the Mega Drive/Genesis and Master System/Game Gear versions of the first two games
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