The graphics engine supports real-time terrain lighting, dynamically-shaded 3D volumetric clouds and alpha-blended scattered clouds. Fog is also implemented and combined with new high resolution textures on models and the terrain, the visuals are tremendously improved. Highly detailed and clickable cockpits for three different F-16 aircraft are included: the Block 50/52, 40/42 and MLU variants.

The multiplayer engine features a new, problem-free connection method with support for a centralized, server-system style of play for internet and Local Area Network (LAN) games. Performance and reliability have been greatly improved for both custom made missions and campaign flights.

Perhaps the most important feature of Falcon 4.0: Allied Force is the Dynamic Campaign Engine (DCE). This is the war simulator where any event happening in any part of the theater of combat affects the war's direction throughout the theater. How you perform in your mission directly, and proportionately, determines what happens elsewhere. This is true for the tens of thousands of computer controlled entities in the game. It means that the player really feels part of a living war environment, part of something that is evolving around them in real time.

Some of the greatest changes have been to improve the interaction of computer controlled aircraft and the hundreds of ground entities in Falcon 4.0: Allied Force. Thousands of hours of work has led to remarkable improvements in artificial intelligence. During missions, computer-controlled aircraft will perform with precision. The role of the Forward Air Controller (FAC) is now implemented, allowing the player to co-operate with other flight aircraft when carrying out ground attacks. Brand new Air Traffic Control intelligently manages the flights in and out of bases.

The F-16's electronic systems simulated in Falcon 4.0: Allied Force, including the avionics, are the most realistic for the home personal computer. Numerous modes and sub-modes in air-to-air and air-to-ground radar are accurately implemented to immerse the player in the feel of operating a modern combat aircraft. Identify and lock up targets just as they do in the real jet: feel the gut-wrenching adrenaline flow when the defensive electronic systems indicate a surface to air missile launch against your aircraft.

The new theater of operations is the Balkans. There are three time periods stretching from the mid-1990s to 2010, featuring appropriate aircraft, squadrons and units. Each theater period has three campaigns, making nine in total for the Balkans. Falcon 4.0: Allied Force also features a heavily revised Korean theater and associated campaigns.