Lost Caves is a Boulder Dash variant. The player controls a famous explorer who while being chased by a band of Nomads finds the entrance to a mythical diamond mine called the Lost Caves. Like in other games of its kind it is played from a side view perspective and the player has to dig through dirt to get to the diamonds. In each of the game's sixteen levels the aim is to collect all ten diamonds and then escape through a wooden door. To reach all the diamonds it is necessary to dig around boulders so that they collapse and create a path.
Dangers include being crushed by falling boulders or being caught by the Nomads that patrol the mines. There are also bombs which explode when dropped or another object is dropped onto them and lava which works the same but will spread around the mine. There are also different wall types: standard walls that can be destroyed with explosives, strong walls which can not be destroyed, disappearing walls which can be activated through a lever and magical walls which can be walked through. There are also signposts which can only be moved through from one direction.