The game is set in the southwest United States of America in an alternate version of the year 1982, during the Reagan Administration. The game is less complex than its predecessor, Interstate '76, lacking the detailed armor and weapon management of the original. Its play-style is closer to console-based vehicular combat games like Twisted Metal, with a single health bar as opposed to 76's armor/chassis strength system. The vehicle models have been updated to reflect the change in era, and overall, the game has a New Wave feel, with several hitherto-unreleased Devo songs being on the soundtrack, as opposed to the first game's funk-inspired style.

Interstate '82 features a story-mode like its predecessor, with one new option: the player can exit his vehicle and enter another, adding some strategy to the game's storyline (i.e., trading a light, fast vehicle for a heavier one could help in a firefight, but be limiting in a race). Another new addition is the ability to skin the new vehicle models. However, die-hard fans of the series argue these new additions were not enough to compensate for the "dumbing-down" of the armor system and the addition of fanciful new weapons (including lasers and car-disabling "karpoons") to the game.