While playing in the virtual world of Ultima Online, a player takes on a persona or character sometimes referred to as an "Avatar" which they control by moving the mouse. They can communicate with others by typing on the keyboard text which appears in cartoon-like thought bubbles.

Players often role-play their character as something totally different than their "real" selves; for example, they may switch genders or they may play with a devilish personality; this ability to fantasize is, of course, among the primary reasons why people play.

Characters are rated with certain attributes such as strength, health, and dexterity. There are, additionally, a large number of skills which can be learned and mastered. These allow the character to engage in specialized and interesting interactions.There are actually about 60 such skills. Mastering any particular skill involves either practicing it, watching a more advanced practitioner, or receiving instruction from special schools. Becoming a master of one skill automatically creates weakness in others; therefore, no character can be a master of all skills simultaneously.

Characters can engage in combat with on another. Not surprisingly, these contests are one of the primary online past-times. Although characters can be "killed" as a result of combat, this fate is more akin to an annoyance than it is to true death. When one’s character is killed, the character’s "ghost" can be resurrected and the game continues with a penalty of reduced skill and/or possessions.

The medieval fantasy world of Ultima is filled with a zoo of non-player controlled ("NPC") animals and monsters. Many of these are inherited from Ultima’s roots in Dungeon and Dragons and Tolkein novels: orcs, dragons, ogres, etc. Monsters exists for the players to kill; they are a renewable resource to be exploited for their treasure and hides. This kind of "adventuring" is an important part of the game play and economy of UO.

In addition to creatures there are also non-player controlled human characters. While the appearance of human NPCs is similar to player characters their interactions are, of course, very different. NPCs are essentially robots which are programmed to do some action such as sell goods, "train" players in a skill, or provide services such as healing. Some NPCs can be hired to guard a premise or act as a companion in warfare.

Human NPCs serve an extremely important role within the economy of UO because they are permanent. That is, real players disconnect to go to bed or (heaven forbid) to go to work and are therefore not online the majority of the time. NPCs provide stability – an NPC shopkeeper will tend his store 24/7 and thus ensure players of a constant source of critical goods and services.

Items are created through three primary mechanisms. 1) Players skilled in manufacturing can create them. 2) They can be created by NPC shopkeepers out of thin air. 3) They are created as "booty" carried by the monsters and become available when the monster is killed. This "loot" mechanic is the method by which the majority of items are created.

Items are also destroyed though various means. For example, using a sword slowly causes irreparable wear and it will eventually break, disappearing from the world. The most common way for an item to leave the world is through "garbage collection" – when an item is left on the ground, it is deleted automatically by the server within a few minutes to ensure that the world does not accumulate junk.

Players are not online constantly and therefore need store items while offline. Several mechanism exist for this. For example, each player is given a "safety deposit box" and bank account which can hold a limited amount of items and gold. The goods placed in such banks are accessible from any banking outlet; this provides a sort of medieval version of an ATM machine. Players who have built houses can store items in the relative safety of their abode. Items on a player’s person are also stored securely when the player goes offline.

All items in the game are transferable from one player to another. A few special items such as homes can only be transferred if the owner agrees to the transaction; however, the vast majority of items can be transferred through theft, a common form of exchange in UO.