Traffic Racer is a three-dimensional, highly realistic, single-player racing game similar to Highway Racer 3D. The player must direct one of six vehicles (a hatchback, a sportier hatchback, a van SUV hybrid, a sportscar, a racecar or a bus) through busy traffic on a long stretch of rural highway during the day, at night and in the rain. The player's goal is to earn cash by scoring the highest points related to the total distance they travel, the number of near misses, the distance they travel successfully in the opposite direction and the amount of time they stay above a specific km/hr. If they crash, the race ends. They receive cash winnings and start again.
The game offers the player One Way, Two Way, Time Attack and Speed Bomb modes. The primary differences between the modes are explained in the titles. With One Way, the player tries not to crash while driving through one-way traffic. With Two Way, the player does the same with two-way traffic. With Time Attack, they attempt to drive the greatest possible distance before time runs out. Lastly, with Speed Bomb, they receive a bus that they must drive as fast and as far as possible before a bomb explodes.
Traffic Racer allows the player to upgrade their vehicle's capabilities in addition to buying new vehicles with the cash they earn from each race. Each vehicle has unique speed, handling and brake levels. The player can also upgrade the paint, tires, engine, steering and brakes. They receive nitrous oxide for free.