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The game begins with the player infiltrating a castle and defeating its boss, a menacing dragon. Upon killing the dragon it unleashes a curse, transforming the player into a green lizard. After this short introduction, the game opens up into a vast, explorable world. To regain his human form, the player must explore this open world, and kill all of the dragon bosses protecting each dungeon. Killing a boss rids Wonder Boy of his current animal form, while transforming him into another. The gameplay is reminiscent of Metroid, and could be considered an early Metroidvania.
The game's hub world, a small village complete with shops and a save point, gives the player access to all the world's main areas. At first, most of the world's pathways are blocked off but they become open to once the various animal forms and their associated abilities have been gained. The player is not allowed to change forms at will, meaning that the while the game's world is in the Metroid vein, progress largely becomes a linear task due to the limits of each animal form. However, later in the game special transformation rooms become available which allow the player to shift between all previously-earned forms.
The various forms (and their inherent abilities) Wonder Boy goes through during the game are:
- Lizard-Man (fire breath, cannot wield weapons)
- Mouse-Man (small size, wall walk)
- Piranha-Man (swimming)
- Lion-Man (tall sword arc)
- Hawk-Man (flight)
- Hu-Man (no special abilities)
Each new area of the world follows the same basic pattern: Wonder Boy begins by making his way to the dragon's lair, fighting enemies and using his newly acquired abilities to progress. Eventually the player reaches the dragon's dungeon. Once the player makes his/her way through that, they are met with a boss encounter in an enclosed space. Typically the key to defeating each boss is timed jumps and sword attacks. Dragon bosses include;
- Meka-Dragon (robot, final boss of Wonder Boy in Monster Land)
- Mummy Dragon
- Dragon Zombie
- Captain Dragon
- Daimyo Dragon
- Vampire Dragon
The game features an inventory system and an equipment upgrade system, as well as loot drops in the form of money or luck gems.
- Wonder Boy III: The Dragon's Trap shares its Roman numerical title with Wonder Boy III: Monster Lair, an arcade game with a Mega Drive port, adding to the confusing Wonder Boy series timeline.
- The cheat code WE5T 0NE (after the game's developer) allows the player to play in human form outside of the intro.