Terraguard is a fixed screen shoot 'em up similar to Moon Cresta and Phoenix. The player controls his ship down the base line and has to shoot at the aliens above him. There are three aliens for each stage and the player has to shoot them all down to move on to the next stage. At the same time the aliens have a ship that tries to land on the surface. To stop it from doing this the player has to be quick in destroying the aliens. Else the player will be killed by the ship's tractor beam.
The player has three lives and earns a new one when scoring 1000 points.
There are three different kinds of aliens: jeeby-jeebys, eyes and mouths. Each alien gives a different score depending on how hard they are to take down.