The Sims Medieval provides a medieval setting for the player to work within, with newly designed buildings and scenery to create an authentic "back-in-time" experience. Players build up a kingdom, send Sims on quests, and earn rewards in the form of Kingdom Points. The game diverges from other installments of the Sims series in that players can win the game by achieving a kingdom ambition. Ambitions include "Best In Show", "Busy Builder", "Efficient Expander", "Fame", "Filled Coffers", "Hard Workers", "Imperial Domination", "Legendary", "No Quest For The Weary", "Safe And Sound", "Thoughts And Prayers", and "Wealthy Populace".
In a change from other Sims games, the character creation, simulation, and architectural aspects are significantly reduced and altered to enforce a sharper focus on RPG-style gameplay. For example, players are able to customize the aesthetics and layout of building interiors, but unable to alter the basic structure and shape of buildings. Instead, the game involves the player upgrading a kingdom, choosing an ultimate goal or an "Ambition" for that kingdom (such as wealth or popularity), and then fulfilling quests that contribute to that goal.
Only two Needs from previous Sims games return: Hunger and Energy. Moodlets, from the Sims 3, provide temporary boosts (both positive and negative) to a Sim's focus slider, which replaces the mood slider of previous games. The player will have to deal with the daily responsibilities of their Sim. These consist of tasks related to the Sim's profession that must be completed in a set amount of time. If left ignored, the Sim will be given a negative moodlet for not doing their duty.
Ambitions can be completed through the use of heroes (or specialists). For example, the player can have a wizard and a physician cooperate on one quest or a knight and monarch on another. Focus, experience, and the traits of the Sim influence their success, and players may choose how the team attempts to conduct the quest. Players also choose which Sim will lead the team. Quest performance is determined by how long and how high the player can keep their Sim's focus slider filled. The player can take as long as they wish on a quest, but quest performance will suffer if they neglect quest tasks for too long.
The Sims Medieval is not a generational game. Much like the first generation of the main series, The Sims, the characters in the game do not progress through life stages: although Sims are still able to procreate, the resulting children only age to adulthood if one of their hero parents die, in which case they take their place. Each Sim has two normal traits and one fatal flaw, which can be turned into a positive trait through a quest, unlike The Sims 3, where there are five main traits depending on the age group.
In an interview with GameSpot, the game's senior producer, Rachel Bernstein stated that the game will be more dangerous for Sims, with death and failure a possibility during the game's quests. Listed dangers included low focus on quests, plague, peasant revolts, wildlife, poisons, duels, and more. Unlike past games, there is a definite beginning and end to the game. Players earn ratings at the end of the game depending on their performance. Players may also reach "Quest Failed!" screens if they do not complete a predefined goal in a predetermined amount of time.