Shanghai Town is a tile-matching game that features a construction element. Level by level, the player clears away Chinese Mahjong tiles from a tabletop to earn enough currency to construct a town on islands in an ocean near the mountains.
The game features Easy, Normal and Hard modes. With each one, the player can only earn a specific type of currency to achieve a points goal displayed in the upper-left area. They receive bronze for Easy, silver for Normal and gold for Hard. The Hard mode has more layers and tiles than the other modes.
The player can see the construction goal at any time in the upper-right area. After they collect enough money, the game displays the building or feature on the outdoor scene. The player earns money with each match of identical pairs of tiles that display classic Chinese characters, bamboo sticks, stones and dragon symbols, as well as unique flower and seasonal designs. The game highlights selected matching tiles with a vibrant green color.
Shanghai Town only allows the player to select tiles that have at least one side on the left or right unblocked by another tile. That said, the player can mix and reposition the pieces using a button marked with double arrows in the lower-left area. If they're unsatisfied with the play or currency rewards, they can use a button marked with a dragon symbol to set a higher difficulty level. The game doesn't reset their score.