X-Men follows the same fighting game controls and conventions Capcom previously established with the Street Fighter II games and the original Darkstalkers. The player can choose between one of six X-Men members or four of their enemies (for a total of ten selectable characters) and proceed to compete in a series of best-two-out-of-three one-on-one matches.

The player has an "X-Power" gauge (similar to the Super Combo gauge in Super Street Fighter II Turbo and the "Special" gauge in Darkstalkers) that builds as the player performs regular or special moves. X-Power gauge starts at Lv. 1 and reaches Lv. 2 when it becomes half-full and an Aura will begin to surround the player's character until it becomes full and reaches MAX level. Players can then perform an "X-Ability", which consumes a small portion of the X-Power gauge, or a "Hyper X", which consumes a greater portion of the same gauge. Breaking one's fall from a throw or performing a counter-throw will consume a portion of the X-Power gauge when performed.

Other features introduced in Children of the Atom include Super Jumps, the ability to roll away or towards an opponent after falling, the ability to determine the aim of a projectile move (such as Cyclops' optic blasts), and the ability to pursue an opponent after performing a throwing attack for follow-up attacks. After selecting a character, the player can choose between "manual" or "automatic" blocking. By selecting to automatically block attacks, some features will not be available during gameplay.

X-Men: Children of the Atom is loosely based on the "Fatal Attractions" storyline. The main antagonist is Magneto, who plans to unleash an electromagnetic pulse on the Earth that will disrupt the magnetic fields and create havoc on the world's electrical systems ushering in a Dark Age for Earth's non-mutant population. With the promise of a mutant-run planet, the X-Men's most formidable foes join forces with Magneto.