Iron Horse is a horizontally-scrolling game set in the Wild West in which the player takes on the role of a train-robber. The cowboy can use either his fists, pistols or a whip and must work his way along a moving train, killing enemy cowboys and collecting money bags.
The action takes place either inside a moving train or on its rooftop, with ladders allowing players to move between the two. Player and enemy movement is on three planes and players can duck to both avoid enemy fire and shoot crouching enemies.
Upon starting the game the player can pick which weapon to use: fists have very short range but will push enemies back, causing them to hit other enemies; the whip has good range and can hit several enemies at once; and the pistol has the best range and can be fired while moving. In addition to the main weapons, sub-weapons can be collected by killing special, box-carrying enemies: lanterns create a fire wave on the ground, lassos tie up multiple enemies and bombs kill all enemies on the screen.