The game's main story mode, Ultimate Contest, revolves around the Leaf Village where the All-Out Ninja Tournament is being held between the rival Leaf and Sand ninja. The winner of the tournament will be crowned Hokage and will be able to put forward a new rule for the Leaf Village, but this power must not fall into the wrong hands. To ensure this does not happen, the player enters the Naruto world to explore the massive 3D rendered Hidden Leaf Village, engage in all-out battle royale matches, interact with residents in the village and complete over 55 missions.

Players can choose their favourite ninja from the most extensive selection of over 40 playable characters from the hit anime TV show including Naruto, Sasuke, Itachi, The Hokages, The Sound Ninja 4 and many more. Battles are made bigger than ever before by unleashing Ultimate Jutsu to customise favourite characters into powerful ninja warriors, and summoning gigantic creatures as allies in Summoning Mode. Ultimate Ninja 3 also offers tons of combat variety either as close combat or using a variety of ranged weapons, and support characters can be called upon to help with super attacks.