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In Poseidon Wars 3-D, the player is a young cadet fresh out of the US Navy officer training school. Through a series of successful missions, the cadet rises in rank all the way to admiral. The cadet can choose any of these missions in any order they wish.
The goal of each stage is to shoot down all the enemy ships and other vehicles, such as helicopters, using their submarine's weapons. This is done via an on-rails light-gun section where ships pass across the screen.
The game used the 3D stereoscopic effects to make enemy ships appear to be closer and further away from the player.