Cacoma Knight is a hybrid of action and puzzle elements. Each level is a single screen. Each screen has a "Qualify" target that shows how much of the screen must be cleared before the game continues to the next level. The player can then use the Magical Chalk to section off an area of the landscape, using either the borders of existing cleared sections or the borders of the screen. When a full shape is completed with no holes in its borders, the smaller of the two sections created is "purified" and returned to the original state shown at the beginning of the level. In the cleared section, there may be power-ups or items that increase the point score of the player. Therefore, a greater "% Cleared" score means more points and power-ups will be rewarded, so it is beneficial to the player to attempt to clear as much of the screen as possible before exceeding the Qualify target. Enemies can impede progress of the player and come in various shapes, sizes and speeds. Some enemies can only move along the borders of the screen and the chalk lines that the player creates, others have free rein of the screen within given borders. Enemies can be destroyed by trapping them within an area of chalk, however, they will repopulate quickly thereafter. The player must avoid getting hit by enemies. If the player allows the character to get hit by the enemies too many times (based on the difficulty), they will be brought to a continue screen. If the player runs out of the Credits, the game ends.
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