Alice: Madness Returns is a psychological horror video game from a third-person perspective. The player controls Alice for the entirety of the game for running, jumping, dodging and attacking.
In combat, Alice gains a small number of weapons that can be utilized in several ways. Her primary (and trademark) weapon is the vorpal blade, a decorated kitchen knife. The remainder of her arsenal is somewhat akin to the benign and mundane items that take on a deadly quality in Alice's tainted Wonderland in the first game. The Pepper Grinder becomes a crank operated gatling gun, used to attack at a distance and pepper pig snouts. The Hobby Horse is used as a sledgehammer to inflict heavy damage and break barriers and defenses. The Teapot Cannon fires tea sieves that explode to cause heavy damage and, like the Hobby Horse, break barriers. By collecting teeth that are dropped by foes or found scattered about the levels, the player can upgrade these items to more powerful versions. Two other weapons cannot be upgraded, primarily because they are more defensive than directly offensive: the Parasol acts as a shield that can be used to deflect and reflect most incoming projectiles; The Clockwork Bomb is a time-delayed/remote-controlled rabbit alarm clock that does a minimal amount of damage to enemies, but its usefulness is better illustrated as a decoy, as well as a weight to keep switches temporarily depressed.
Alice's health is tracked by a number of rose petals. Should Alice's health fall to zero during game play, the player is forced to start at the most recent checkpoint. Falling off platforms into bottomless pits or dangerous liquids do not damage Alice but restart her at a nearby platform. The game also introduces Hysteria, which can be used when Alice's health is very low, and it can only be used for a limited amount of time.
While working each level, the player can discover various secrets. A primary mechanic is to use Alice's shrinking potion to reduce in size, allowing her to walk through small spaces like keyholes, but also reveals invisible platforms and surfaces; after returning to normal size, these platforms slowly fade back to invisibility, requiring the player to remember their location. Pig's snouts, which make noise when the player is close, can be struck with the pepper grinder to reveal new paths. Radula rooms provide a short challenge to the player, which on completion grants a jar of paint; obtaining four jars earns the player another rose for Alice's health. Memories can be picked up that provide voiceovers revealing parts of the game's backstory.
Upon completion, the player can start a new game plus, letting them play through the game again but keeping all their weapons and upgrades from the previous attempt. From the menu, the player can also review the memories that they have found within the game.
Within events of the first game, Alice Liddell becomes insane, believing herself responsible for a fire that consumed her home and her family, escaping into a twisted version of Wonderland. While held at Rutledge Asylum for treatment, Alice was able to conquer her doubts, and eventually was released from the ward. Alice: Madness Returns takes place in 1875, a year after Alice's release. Alice, now 19 years old,resides at an orphanage in Victorian London, under the care of Doctor Angus Bumby, a psychiatrist who uses hypnotism to help his child patients forget their memories. Though she believes herself cured of her madness, hallucinations of Wonderland continue to appear.
During an errand, Alice is struck by a hallucination and believes herself to be in Wonderland again. Though initially idyllic, the peaceful land quickly becomes corrupted by the Infernal Train that rampages through it, leaving behind the Ruin, a force that attempts to stop Alice. Alice meets with the Cheshire Cat who affirms that it is some outside force, not Alice, that has caused this corruption, and urges her to seek out former friend and foe to discover the source of the Train. Throughout the rest of the game, the player witnesses periods where Alice briefly returns to reality between episodes occurring within Wonderland. In the real world, Alice learns from the family lawyer that her sister, Lizzie, was first to die in the fire, despite being the farthest from its source, and had been locked in her room.
Within the corrupted Wonderland, Alice attempts to learn more from Wonderland's various citizens, including the Mad Hatter, the Mock Turtle, the Walrus and the Carpenter, and the Caterpillar. She is ultimately told that the Queen of Hearts still lives despite her defeat at Alice's hands before, though in diminished capacity. At the Queen's castle, Alice discovers the Queen has taken on the appearance of her sister, Lizzie. The Queen reveals that an entity called the Doll Maker has taken over the Infernal Train and is corrupting Wonderland.
Returning to London, Alice starts to recall her memories of the night of the fire, and realizes that Dr. Bumby was there. He is responsible for the death of her sister and her whole family. She comes to the conclusion that Dr. Bumby is attempting to erase the memories of the fire from her mind and, as he has done with other children, trying to leave her as a "blank toy" to be taken by abusive masters and child molesters for a price. Furious, Alice confronts both Dr. Bumby in the real world at the Moorgate station train station and Dr. Bumby's Wonderland counterpart, the Doll Maker, in her fantasy. Dr. Bumby admits to his crime, and even attests to setting Alice's home on fire after Lizzie refused his advances, removing any witnesses. He points out that by wiping out her Wonderland, he will make her forget the events of that night, while he will continue as a member of high society. Alice defeats the Doll Maker in Wonderland, giving her the strength in the real world to push Dr. Bumby into the path of an oncoming train, killing him. As Alice leaves the station, she finds herself in a hybrid vision of London mixed with Wonderland. Alice wanders into the unknown terrain as the Cheshire Cat monologues that Alice has found the truth that was "worth the pain fighting for", and Wonderland, though damaged, is safe for the time being.