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Four factions on two sides wage the War of the Ring: Representing the Free Peoples are the horse-lords of Rohan, and Gondor with its forges and battlements. The Forces of Darkness are the fighting Uruk-hai of Isengard, and Mordor's orc hordes, bolstered by Haradrim, Mûmakil and Olog-hai.

Keeping with the trends of contemporary RTS titles, basic units operate in groups, significant characters are represented by "hero units" as popularized by Warcraft III, and the destruction of units gathers points for the purchase of special abilities. There is also a unit limit.

Unit strengths and weaknesses form a sort of rock-paper-scissors system. Cavalry beats swordsmen and can run down infantry units while taking a fraction of the damage themselves, archers beat cavalry if they get the opportunity to fire, swordsmen beat archers. Pikes beat cavalry, fire beats Ents, etc. Units gain experience and levels, becoming hardier and more dangerous. Squads replace lost members without losing experience.

Most normal units have purchaseable upgrades and may also have abilities such as changing formation, changing weapons, combining with other squad types, Ranger stealth and orc cannibalism. Heroes are unique, far more potent units (and Hobbits and Gollum) that lack upgrades but do have multiple, elaborate abilities, and can be purchased back if killed. Most hero abilities require certain experience levels. Good has the advantage in the quantity and quality of heroes; Gandalf at the peak of his strength is an anti-army device. Buildings also gain experience and may become able to build new units, research new upgrades, or bestow better passive bonuses such as a reduction in cavalry build costs.

The player's special powers are purchased from a small tree. They can be utilitary (Sight of the Palantír, reveals an area), supportive (Healing), or able to call in temporary units (Summon Eagles, Summon Balrog). They are usable indefinitely once acquired, with recharge times but no cost. Both factions on a side share the same powers, and the tree is much larger (and slower to climb) in campaign mode than it is in skirmishes. Good has some powers that boost the ability of a single hero (Power of the Istari, Andúril). Evil receives aid in resource harvesting.