Akai Katana is a top-down shooter with the Bullet Hell play style, meaning the ship has a specific area called the "hit box" that needs to be maneuvered through a maze of bullets and enemies. The player can switch between a defence and an attack mode. In defence the ships moves faster, destroying enemy up close and collecting energy. In attack the ship moves slower but shots are more powerful. The collected energy then orbits the ship and grows when enemy bullets pass over it. Energy is collected when switching back to defence. Energy is used to activate the phantom mode for enhanced abilities.
The plot follows a set of pilots in a parallel version of the Taishō period. An evil empire has seized rules with the power of blood katanas, which require human sacrifice in order to unleash their horrible power. The three pairs of main characters find themselves forced to themselves wield blood katanas and take the life of someone close to them in order to claim the power to stop the empire and the use of blood katanas forever.