Alien Invasion is a fixed screen shooter game based on Space Invaders but with some additions to the gameplay. There are twelve different invaders in the game, including one that takes two hits to kill. The invaders have three different types of bombs: normal bombs, which drop straight down, spinning bombs, which drop diagonally, and homing bombs, which seek out the player. One notable difference from Space Invaders is that the old shields are gone. Instead, the laser base has a built-in shield that can be activated for protection. The player starts with two shields and gets new ones at the beginning of each new wave. The UFOs act as supply ships and randomly drop power-ups that the player can pick up. The power-ups include extra lives and shields, impeding the movement of invaders or dropping mobile bombs and rockets. There is also a power-up that makes invaders invisible.
The game also comes with editors that allow the player to change sprites and wave formations.