In Cruise mode, the player can simply explore the city at their own pace. Each mode except Cruise is divided into missions-completing one unlocks the next. Environmental conditions found in each mode include: weather (sunny, rainy, cloudy, and snowy), time of day (sunrise, afternoon, sunset, and night-time), and the density of pedestrians, traffic, and police vehicles. The heads-up display includes information about the race and a detailed map, but this display can be turned off. Players start off with five vehicles five more are unlockable. The available vehicles range from a Volkswagen New Beetle and a Ford F-350 to a city bus and a Freightliner Century truck. Unlocking vehicles requires completing goals such as placing within the top three in any two races. If the player has previously won a race mission, they can change the race's duration and the weather when replaying it. The Checkpoint mode allows players to set the frequency of traffic, police cars, and pedestrians.

Vehicles can accrue damage from collisions, and can be disabled if excessive damage is accrued, resulting in premature failure of Blitz or Checkpoint races, or several seconds of time lost before the vehicle is immediately restored in Circuit races and Cruise. The game's city environment is modeled after Chicago, including many of its landmarks, such as the 'L', the Willis Tower (then known as the Sears Tower), Wrigley Field, and Soldier Field. The streets feature a number of objects the player can crash into including trash bins, parking meters, mailboxes and traffic lights. In Checkpoint mode other vehicles move in accordance with traffic lights, but the player is under no obligation to obey them. Midtown Madness supports multiplayer games on a local area network, the Internet, or by serial cable connection. The Multiplayer mode was originally supported by Microsoft's MSN Gaming Zone, but this service was retired on June 19, 2006. It is now supported by similar services such as GameSpy Arcade and XFire, via DirectPlay.

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