Keystone Kapers is about police officer Keystone Kelly trying to capture the con-artist and thief Harry Hooligan who is at large in Southwick's Emporium. The game involves the player controlling Kelly, moving him left and right and having him jump and duck to avoid objects such as shopping carts, beach balls and toy biplanes. The player's goal is to apprehend Harry, who can be tracked on a mini-map at the bottom of the screen where Kelly is the black dot and Harry is the white dot. Kelly can maneuver himself between the floors of the building between elevators and the escalator.

The game ends when the player runs out of lives: lives are lost when running out of time, colliding with a biplane, or allowing Harry escape to the roof of the building. Points are rewarded when apprehending Harry, for the amount of time left when apprehending Harry, and collecting items left around the mansion such as moneybags and suitcases. Extra lives can be earned for every 10,000 points.