The game's plot takes place after the Battle of Endor, and centers on two fighter squadrons: the New Republic's Vanguard Squadron, and the Galactic Empire's Titan Squadron. In the plot, "two pilots shape the balance of power in the galaxy." Part of the plot deals with the New Republic's Project Starhawk, which the Empire has gotten wind of, sending spies to deal with it.
The entire game is playable in VR. The PC version fully supports joystick use as well as hands-on-throttle-and-stick rigs. Crossplay is available. The game takes place entirely during a first-person perspective. The game features a singleplayer campaign and various multiplayer modes. The campaign alternates between the perspective of New Republic and Imperial pilots.
There are four types of starfighters available in the game: fighters, which are balanced in firepower and defense, interceptors, which have superior speed and are useful against fighters, support, which are heavily armored and can support other craft, and bombers, which are slower with better firepower and armor and are best for taking down enemy capital ships. The New Republic has access to these classes via the X-Wing, A-Wing, U-Wing, and Y-Wing respectively. Similarly, the Empire has access to the TIE fighter, TIE interceptor, TIE Reaper, and TIE bomber.
Dogfight: 5v5 battle with respawns and weapon loadouts. The winning side is determined by whichever side reaches 30 kills first.
Fleet Battles: Designed as multistage conflicts, Fleet Battles begins in a social hub that is used to devise strategies. After settling on a strategy and launching from the hanger, players are tasked to push a frontline toward the enemy’s side. Depending on which way the line is moving, players must attack or defend two medium-sized capital ships. If a player succeeds on the offensive end, the final goal is to take out a flagship, beginning with its subsystems: shield generators, power systems, and targeting systems. When the flagship falls, the destroying side wins. This mode can be played as a lone player against AI, or as part of a two-player online coop experience. It can also be played as a ranked mode with two teams of five players fighting against each other.
Star Wars: Squadrons also features a "training" mode for players to practice and experiment with different load-outs as well as a Fleet Battles tutorial.
In Practice, players are able to add in as many starfighters, cruisers and capital ships as they like to sharpen their skills. They can also experiment with different starfighter load-outs to find the optimal setup of their choice.
The Fleet Battles tutorial gives players an understanding of the mechanics of the game and gives a unique reward once completed.