The engine allows anyone to create characters, background stages and other game objects through interpreted text files, graphics, and sound compilations. Officially, Elecbyte claims to have forgotten what the acronym M.U.G.E.N stood for, but the readme documentation states that its meaning referred to the days when the engine was meant to emulate shooting games as opposed to fighting games.

While the engine is set up primarily for fighting game development, several other game types have been developed using it, including shooter and platform style games. The engine allows users to insert created characters, background stages, and other game objects through interpreted text files, graphics, and sound compilations to create a functioning fighting game similar to commercial games. Beta versions of it were made to work on DOS, Linux and Windows platforms, distributed through their website. The engine was originally released in July 17, 2001.