Pacewar is set in the distant future with two factions fighting for control over space.

As neither side has any particular advantage over the other, it is a constant stalemate. Only absolute domination by one of the factions can end this perpetual war, and this can only be achieved by pure piloting skill.

A team wins the round when all ships of the other team are destroyed, and a certain number of victories more than the other player is needed to win the game. But there's a catch: as a team gets closer to winning, it loses ships, so you need to be better than the other team to succeed.

Human players take over one ship at a time from their respective teams. If a human player's ship is destroyed, that human player takes over an AI ship from their team randomly. This ensures that the human players are always in the game.