Different recipes require different resources and crafting stations. Players use resources to craft new items and equipment. Some resources may only be found in specific areas of the map, stored in common and rare containers, or dropped by certain enemies.

Players begin with low health and mana, which can be increased by finding and crafting specific items. Many resources, such as metal ores, can be found while exploring caves. The game's world is made up of several layers of tiles that players can interact with and modify. The game starts in a procedurally generated world, with players starting out with basic tools and a non-player character (NPC) guide to get them started and bring their attention to aspects of the game and progression. The game is noted for its classic exploration-adventure style of gameplay, similar to games such as the Metroid series and Minecraft.

The game has a 2D sprite tile-based graphical style reminiscent of the 16-bit sprites found on the Super NES. Terraria is a 2D sandbox game with gameplay that revolves around exploration, building, crafting, combat, survival, and mining, playable in both single-player and multiplayer modes. In-game screenshot showing the player at the starting area of a newly generated world in 1.4 update

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