Rally-X is a maze chase game where the player controls a blue Formula One racecar. The objective is to collect yellow flags that are scattered around an enclosed maze while avoiding collision with red-colored cars that pursue the player. Mazes scroll in the four cardinal directions and are clustered with dead ends, long corridors, and stationary boulders that are harmful to the player. Each level contains ten flags that increase their point value when collected in succession. One of the flags is a "Special Flag", indicated by an S next to it, which doubles the value of each flag collected thereafter. The player can temporarily stun the red cars with smoke screens, which depletes a portion of their fuel meter at the right of the screen. The meter constantly depletes the longer the player takes in a level, and acts as a timer. As the game progresses, more red cars are added and become more aggressive. If the player is crashed by any car, it will lose a life, the game ends when all lives are lost.

The player has a radar beneath their fuel meter, which displays their current position on the map as well as the location of the flags and red cars. The third level and every fourth thereafter is a bonus round (called a "Charanging Stage"), where the objective is to collect the flags in a certain amount of time. In these bonus rounds, the red cars remain idle and will not chase the player unless their fuel is empty.