This section requires expansion. Several pre-release screenshots show that there was originally a section where the players got to ride the motorcycles they are so often attacked by. This section was removed for the final version, but is still playable (though buggy and unfinished) with a Game Genie code in the Japanese version. Axel and Skate are absent from the European box art, while the new character Zan appears alongside Blaze. The artwork was created for a British European magazine for promotion and Sega bought the piece to use for the boxart.
The game is more fast-paced than its prequels. Running and vertical-dodge moves were added (only Skate could run in Streets of Rage 2), and most player attacks deal less damage than in the predecessors. The level timer has been replaced with a "power meter" that, when full, allows players to perform special moves without draining the player's life bar. Unlike the first and second game, weapons in Street of Rage 3 can only be used a fixed number of times. However, additional weapon special attacks could be performed. The game also features return of SOR1 team attacks in which two characters work together to perform a powerful attack just like it was in the first game. Blitz moves, performed while players run, were altered so that they can be upgraded in strength over the course of the game. The player would have to earn a set amount of points on one life to upgrade it. Losing a life would put the blitz move down a level, but the upgraded moves are still possible to do by pressing X on a 6 button controller, followed by a button sequence. Traps in stages were brought back from the original game, for example, enemies can once again be thrown into pits or off the side of an elevator. Enemy AI was expanded so more enemies can pick up weapons, block attacks, employ co-operative attacks (usually, a Big Ben-like enemy will throw one of the Garcia enemies at the character to smack them down), and even steal exposed food items to regain health.
After being defeated twice, Syndicate crime boss Mr. X has started a research company called RoboCy Corporation to act as a cover for his illegal activities. The world's best roboticist, Dr. Dahm, has been brought in to help him create an army of realistic robots to replace important officials from the city. With the replacements in place, Mr. X plans to run the city using a remote control device. His criminal organization, The Syndicate, has strategically placed bombs around the city to distract the police while the city officials are dealt with. Dr. Zan discovers what the research is really for and knows the Syndicate must be stopped. He contacts Blaze Fielding with the details of The Syndicate's plan. Blaze quickly contacts her old comrades Axel Stone and Adam Hunter for a task force to bring down The Syndicate once and for all. Axel quickly joins the task force, but Adam can't make it (due to his own assignments from within the police) and sends his young brother, Eddie "Skate" Hunter instead. The game has four endings depending on the difficulty level and if the player defeats certain levels in an alloted amount of time. Good Ending: The player has completed the game in Normal or Hard mode, rescued the Chief of Police and defeated Robot Y before the time limit expires. The Syndicate headquarters are about to explode, but Adam manages to rescue his companions in his helicopter. The headquarters explode, and an image of the four characters looking happily at the saved city on a blue background appears, with an upward text relating the officers' rescue and the deactivating of the bombs, as well as the fact Dr. Dahm is being rehabilitated in a psychiatric hospital. Meanwhile, the characters have their own separate ways, as depicted on the background pictures in the credits. After the credits, an image of the gang watching the sunset with Adam and Max is shown, with the message "THE END" below. Neutral Ending: The player has completed the game in Easy mode (which lasts until level 5). The player has defeated Mr. X's clone, but after that, he says the characters must 'try harder' if they want to save the city. The image shown results to be a monitored image from Mr. X's office, who breaks the wine cup while furiously looking at the scene. The text "THE END?" appears below and there are no credits. Neutral Ending 2: The player has completed the game in Normal or Hard mode, and failed to rescue the Chief of Police. In that case, the last level is played in the City Hall and the player must defeat the Chief's clone and Shiva in front of the press. When both are defeated, Dr. Zan tries to make Shiva confess, but he fails to do so, and an image of Shiva wounded with the gang behind him appears on Mr. X's monitor and, again, he breaks the wine cup while furiously looking at the scene. The text "THE END?" appears below and there are no credits. Bad Ending: The player has completed the game in Normal or Hard mode, rescued the Chief of Police and defeated Robot Y after the time limit expired. The gang is saved by Adam, only to see the city devastated by the explosion series. A pitch black background appears, with the text telling of the player's failure, and there are no credits.
Three of the playable characters from former games return in the sequel: Axel Stone, Blaze Fielding, and Eddie "Skate" Hunter (Sammy Hunter in the Japanese version), each of which have their respective strengths and weaknesses. Dr. Zan replaces Max from the second game, with any weapon he picks up turning into a ball of energy. Adam from the first game makes a story cameo, and Max only makes a cameo appearance in the game's "good" ending. Three of the game's boss characters can also be accessed through in-game codes. The first mid-boss, the homosexual caricature Ash, was removed from the Western releases of the game (although he can be accessed through cheat cartridges). Shiva, the martial artist who debuted in Streets of Rage 2 and newcomer Roo (Victy in the Japanese version) the kangaroo can also be accessed. Shiva and Roo are unable to use weapons.
When the game was adapted from Bare Knuckle 3, the original Japanese version, to Streets of Rage 3, significant changes were made. The clothing of the three returning heroes (Axel, Blaze, and Sammy) were altered from their original colors seen in previous Streets of Rage games, the female enemy characters wore less-revealing outfits, and a sub-boss named "Ash", a gay stereotype was removed from the English version (though he is still accessible in Streets of Rage 3 as a playable character via cheat code). The voice-effects were also changed, with most noticeably Axel's catchphrase of "Grand Upper" for his semi-special move being replaced with "Bare Knuckle". Another notable difference between the two games is the plot: The Japanese version of the story opens with a new explosive substance called "Laxine", discovered by a character named Dr. Gilbert (who is revealed to be the true identity of Dr. Zan), which explodes in the city and kills thousands of people. At the same time, a military general named Ivan Petrov vanishes. It is later discovered that Mr. X orchestrated the general's disappearance and plans to use Laxine to start a global war. In the English version, all references to Laxine were removed, General Petrov was replaced by the city's Chief of Police, and the plot now involves a scheme to switch major city officials with robot clones in order to take control of the city. Another difference was if the player failed to save the general, the player has to head to what appears to be the White House. This too was changed in the English adaptation, where instead if the player failed save the Chief, then the player has to head to City Hall, although the building depicting the City Hall is still clearly based on the White House. The bad ending sequence of Bare Knuckle 3 features a photo of a devastated city as text narrates the player's failure; this was removed in Streets of Rage 3 and text scrolls upward on a black background. The credits were removed from the bad ending of Streets of Rage 3 (possibly to show that it was not the true ending), whereas in Bare Knuckle 3 they still play. The game's overall difficulty was also altered for the English version, with the game's Normal setting being significantly more difficult than even the Japanese version's Hard setting. Also, the English version of the game cannot be completed on the Easy setting (it will end after Stage 5). Axel and Skate are noticeably absent from the European box art, while the new character Zan appears alongside Blaze. This is because the box art for the game was originally used as a magazine cover art that Sega of Europe brought later to be used.
The soundtrack featured influences from Detroit's hard techno scene (Jeff Mills, Robert Hood, etc), who were popular in Tokyo dance clubs at the time. It used a random note generator programmed by Motohiro Kawashima and Yuzo Koshiro and featured more robotic, hard-driven lines.
The Japanese version of Sonic Gems Collection includes Bare Knuckle I, II, III (Streets of Rage 1, 2 and 3). These, along with Bonanza Bros., are excluded from releases outside Japan to obtain lower age ratings. Streets of Rage 3 later appeared alongside its other games in Sonic's Ultimate Genesis Collection. The PAL region version of Streets of Rage 3 is uncommon, and thus it usually fetches in high prices in secondary markets.