Only the lead guitar is available to be played in the Career mode. Over the course of the Career mode the band plays at eight available venues. The venue system from the original game has been altered slightly and has the band traveling geographically from town to town in order to play at the next arena. The venues are Nilbog High School, The Rat Cellar Pub, The Blackout Bar, The RedOctane Club, the Rock City Theater, the Vans Warped Tour, Harmonix Arena and Stonehenge. The venues feature lighting and pyrotechnics that are synchronized with the music.

Not all songs in the main setlist are available from the start. Once a song is unlocked for play within Career Mode, it becomes available for play in all other modes. When working through Career Mode at a specific difficulty level, the next tier of songs is unlocked once the required number of songs on the current tier (3-5, depending on difficulty and console) are completed. Additionally, the encore song for a particular tier is only made available once its requirements are completed. On the Easy difficulty setting, there are no encores available, but the next tier will be unlocked immediately after completing the required songs in the previous tier.

Successful completion of a song on Medium or higher difficulty during Career mode will earn the player in-game cash. Higher difficulty levels and better scoring performances are rewarded with more cash. In-game money can be used at The Store to buy various items. Some items are available only after completing all songs at higher difficulty levels or 5-star performances. Within The Store, the player can purchase new Gibson guitars, guitar finishes, three additional characters, alternate outfits for the eight characters available from the start, bonus songs, and videos. For unknown reasons, the bonus videos are absent from the PAL version of the game. Within the Xbox 360 version, there is also an option to access the Guitar Hero II content on the Xbox Live Marketplace.

There are three different multiplayer modes available:

Although, online multiplayer was not available at the release of Guitar Hero II for the Xbox 360, RedOctane has stated that they hope to be able provide this later once they are able to work out the technical issues.

Practice mode is a new addition to the game, allowing a player to practice certain sections of a song ("Verse 2," "Chorus," "Bridge 3," "Gtr Solo 4," etc.) on different difficulties and instruments. Practice mode gives the player the ability to toggle the speed of the notes (Full Speed, Slow, Slower and Slowest) and does not stop a song no matter how many mistakes are made. Players can play the bass guitar lines on most songs. On others, a rhythm guitar line is available instead.

Both the PlayStation 2 and Xbox 360 versions of Guitar Hero II feature the same core 64 playable songs (40 licensed, 24 bonus songs). Among the featured tracks are "You Really Got Me" by Van Halen, "Sweet Child O' Mine" by Guns N' Roses, "Woman" by Wolfmother, "War Pigs" by Black Sabbath, and "Free Bird" by Lynyrd Skynyrd. The Xbox 360 version of the game contains 10 exclusive tracks not included in the PlayStation 2 version, including "Billion Dollar Babies" by Alice Cooper, "Rock and Roll, Hoochie Koo" by Rick Derringer, and "The Trooper" by Iron Maiden. Additionally, the Xbox 360 version allows for downloadable songs to be purchased on the Xbox Live Marketplace. The Xbox 360 version also features a reorganized set list that provides a more balanced progression in difficulty.

Most of the songs featured in the main set list are cover versions, with the exception of "Stop!", "Possum Kingdom", "Dead!", and "John the Fisherman"; these four are based on master recordings. The unlockable bonus songs are all master recordings, including some specifically arranged for use within Guitar Hero II. Cover songs are credited on screen with the phrase "as made famous by" (for example, "Heart-Shaped Box, as made famous by Nirvana"), while the original songs are credited with "as performed by" (for example, "John the Fisherman, as performed by Primus").

RedOctane stated that the Xbox 360 version of Guitar Hero II "planned to feature more downloadable content than any other 360 title" utilizing the Xbox Live Marketplace, including many of the songs from the original Guitar Hero a week after the release of the game. Four such packs have been released since April 11, 2007. Additionally, two packs featuring new content to the Guitar Hero series have also been released, including songs from My Chemical Romance, Protest the Hero, Trivium, and Atreyu. There have also been individual track downloads featuring songs from bands Los Rodríguez, Pleymo, and Soilwork.