The player can destroy enemy monsters and then salvage the mana they leave behind, represented by pearls of varying sizes. To accomplish this, the player has to possess the mana so that mana-collecting balloons bring them to the player's castle (the balloons ignore mana that are unpossessed or possessed by an enemy wizard). Greater amounts of mana stored in the castle allow the player to expand the castle and cast more powerful spells.
As the player expands the castle, it spawns additional balloons and armed guards that defend the castle against attacks by enemy wizards. Besides storing mana, the player's castle also serves as a home base for the player character where he can regain health and mana. Upon death, the player character respawns at his castle. Dying without a castle forces the player to restart the level since the game does not have a mid-level save feature. As long as the player's castle is at least partly intact, the player character cannot die.
The magic carpet can be piloted in three dimensions, similar to a helicopter, although the player cannot roll and it is impossible to crash. Instead, when the carpet approaches an obstacle, it automatically ascends to fly over the obstacle.
Spells
Magic Carpet has a maximum of 24 spells. The player character can have up to two spells equipped at a time, one for each hand.
For offense, there are scorching fireballs, very accurate lightning bolts and devastating meteors. For defence, players can heal themselves, bring up a shield to reduce damage from enemy fire, and even use rebound to deflect certain fire-based spells back at the enemy.
In multiplayer, there is no completely dominant spell, which often adds some balance to the game and results in several tactical dilemmas. For instance, meteor is usually considered to be among the most powerful attacks and can often kill weakened wizards with a single hit, but it becomes a double-edged sword if the target wizard has rebound cast. However, rebound is not a perfect defense. It costs a good deal of mana and, as with all other spells, does not allow one's mana reserve to recharge while it is in use. Moreover, it does not defend against lightning and many other powerful attacks. Lightning bolts are more accurate and more powerful than fireballs but lack the latter's longer range.
Exotic spells include teleport, which takes the player back to his castle and returns him to his original location if cast a second time, and skeleton army which creates undead archer minions for either attacking enemy castles or wreaking havoc in civilian towns.
Revolutionary for the time were real-time terrain-altering spells such as crater, volcano, and earthquake; it is possible for the player to carve through a continent (rather than splitting apart a land mass, earthquake digs a twisting gorge in the ground), build up a volcano, or dig a lake (with crater). Even the staple build castle spell is interesting; casting it in a suitable location would cause the ground to morph up into the shape of a fortress. Players soon discovered that crater was very useful against monsters and wizards alike on high ground, as (literally) sinking the earth from under the target was often sufficient to kill it, and for monsters the resulting crater would provide a handy hole in the ground to keep all of the mana together. Volcano proves to be an extremely deadly castle killer, creating damage both from the initial strike and from the lava rocks that fly out in the subsequent eruption and bounce along the ground, causing further damage along the way. Even the staple castle itself is proficient at destroying legions of weaker enemies (indeed, it will kill nearly any kind of monster that happens to be over the player's castle at the time); strategically casting it right in the middle of a swarm can net a weak player lots of mana to quickly build up his strength.
After level 26 the player could not retain spells picked up in earlier levels. This presented new challenges for players. For example, some levels' challenge depended heavily on barriers and mazes in the form of walls that the player could not cross over. Certain spells such as Crater, Earthquake, and/or Volcano would tend to make such obstacles useless. On certain levels, crucial spells, such as Castle, were left out entirely or were only available after the player had completed a desired task (usually along the lines of killing all of the monsters on the level).
Magic Carpet Plus replaced the rarely used flamewall with the guided meteor (specifically for anti-player duels, as opposed to the regular general-purpose meteor).
Reception
Reviewing the Saturn version in GamePro, Tommy Glide lauded the game's massive size, wide open 3D environment, morphing terrain animations, subtle touches to the sound effects, and accessible controls. He concluded that "If you want to break out of those corridor adventures and play an original first-person shooter, test-drive this carpet of the Persian persuasion." Sam Hickman of Sega Saturn Magazine approved of both the originality of the game and the accuracy of the Saturn port, summarizing that "as a conversion, Magic Carpet is actually very good. As a game in its own right it's nigh on brilliant." She criticized the absence of multiplayer mode, but praised the inclusion of additional levels and a new spell, as well as the more streamlined spell system, and described it as one of the Saturn's most visually impressive games to date. Maximum assessed that the Saturn version is graphically less impressive than the PC and PlayStation versions, but carries over the gameplay flawlessly. They praised the game itself for its deep and original yet enjoyable gameplay, summarizing it as "a perfect mix of strategy and mindless blasting".
Reviewing the PlayStation version, the four reviewers of Electronic Gaming Monthly commented that the controls and interface are confusing at first, and that the graphics become pixelated when getting close to objects, but three of the four felt that it was an overall enjoyable game. Tommy Glide gave it the same ratings as the Saturn version in all four categories, and reiterated his praises for that version. A Next Generation critic commented in a brief review that "Magic Carpet has a lot of challenging action. But a weird control scheme and so-so graphics fail to deliver." However, the magazine's review of the Saturn version in the same issue was much more positive, praising the originality, demanding strategy, massive length, and "airy, mystical quality".
In 1996, Computer Gaming World named Magic Carpet the 137th best game ever. The editors wrote, "Darned weird rules were offset by a rich, 3D world to explore and conquer."
Next Generation reviewed the PC version of the game, and stated that "Sure to be loads of fun for fans of any genre."