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The game is set in the Wing Commander universe and it contains seven factions: Merchants, Bounty hunters, Retros (religious group), Pirates, Militia, the Terran Confederation and the Kilrathi. Some of them will always attack the player on sight, others will only attack if the player has choosen to become their enemy.

Players can choose to become a pirate, a merchant, a mercenary or a combination of the three.

The main gameplay is made up of space combat and flying, traversing the universe grouped into star systems and landing on planets and bases. On these -planets players can take on various missions that can be obtained from mission computers and interacting with people. The game has a huge sandbox style, allowing the player to go wherever he/she chooses. The story missions can be taken on whenever the player wishes to.

Players earn credits by completing various types of missions as well. The different types of missions available are: patrol, attack, cargo, and bounty. The miscellaneous missions can be obtained from a mission computer located on any bases. There is also a Merchant's and Mercenary's Guild in which the player pays a membership fee and is able to sign up for higher paying missions. Not all bases have both Guilds, some have either, and some even have none.

Additionally to earning credits, players can also buy commodities from one base and sell them to another. These commodities range from agricultural goods to textiles to weaponry to electronics and even to illegal drugs and slaves. When flying from one location to another, Confed and Militia patrols may scan your cargo hold for contraband. If they detect it they will attack you.

When players are ready to begin the storyline missions, they must first go to the New Detroit base. There in the bar of New Detroit, players will find a fixer named Sandoval. Sandoval wishes to hire you for a simple cargo run delivering iron to a refinery base. As collateral he offers you a mysterious object which he claims is an ancient alien artifact. If his mission is accepted, the players will keep the artifact in their possession and learn more about it as they progress through the game and fly missions for the game's various fixers.

The ancient alien artifact is the main plot device in Privateer and players will find numerous factions willing to either kill you or ally themselves with you in order to get close to it.

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