Players seeking a more demanding experience in Onimusha: Way of the Sword will find that the game's hardest difficulty, dubbed "Carnage," is not accessible from the outset. Instead, this punishing mode is unlocked only after completing the game once. This means those hoping to immediately test their skills on the highest setting will need to progress through the title first.

The game features two primary difficulty settings that can be switched at save points: "Story" mode, described as ideal for action game beginners and allowing focus on the narrative, and "Action" mode, designed for experienced players who enjoy challenging battles and will be kept on their toes. The "Story" mode offers assistance such as on-screen prompts for action sequences and increased damage output while reducing incoming damage.

Individual difficulty adjustments are also available, allowing players to fine-tune aspects like action prompts, tutorial messages, and navigation UI icons. These options provide a degree of customization for those who wish to tailor the experience without resorting to the highest difficulty.

Upon completing the game, the "Carnage" difficulty becomes available. This mode is characterized by its high stakes, where a single hit can prove fatal. Unlike the other settings, "Carnage" is a New Game+ mode, meaning it carries over certain elements from a completed save file. This includes awakened abilities, enhanced basic and special attacks, acquired upgrades for items like Hozuki Pouches, certain materials, charms, and charm upgrades. Players will also retain unlocked outfits, tutorial drills, boss rematches, Genma Notes, and rescued Lion Dogs.

However, not all progress transfers to "Carnage" mode. Key elements that do not carry over include story and sidequest progression, clothing, sword, and gauntlet upgrades, materials needed for these equipment enhancements, red souls used for upgrades, and the Spirit Mirror save points. The Oni bow and the progression of items available for purchase with red souls are also reset.