Several new features have been added to Budokai Tenkaichi 3. Also new to the franchise, is the 'Armor Break' where you can destroy your opponents' clothes and armor using with Energy Clash and Ultimate Blast. The drawback to this technique is that it will rapidly drain the user of energy unless equipped with certain Z-items. It allows the user to get behind the opponent at high speeds for either a strike or to avoid a Blast 2 attack.

The Z Burst Dash is much faster and more evasive version of the Dragon Dash. Depending on the moves of the character you might not be able to use this feat such as Videl or Hercule. The Blast Combos are normal combos used in the game, however by inputting the another button into the attack will allow you to use a blast attack for extra damage. The additional combo attacks will be able to help chain in more attacks for more damage and longer combos. Other features in the game include more combo attacks or character specific combos, the Blast Combos, and the Z Burst Dash. The game supports 480p display mode only for the Wii version. Inserting a Budokai Tenkaichi 1 or 2 disc during play unlocks Ultimate Battle or Ultimate Battle Z, modes featured in the respective games needed to unlock them. As compensation for the lack of online, Spike has added a new 'Disc Fusion' system to the PlayStation 2 version. Players can fight against anyone from around the globe with a ranking system showing the player's current standing compared to anyone else who has played online. The Wii version features online multiplayer capability, the first game in the series to have such a feature. You can also change the aura of your character. There are also several other time differences, such as dawn and afternoon. Night and day stages allow for more accurate battles in Dragon History, as well as the ability to transform into a Great Ape by using the moon.

Battle Replay allows players to capture their favorite fights and save them to an SD card to view later on.

Several new notable features include: Battle Replay, night and day stages, the Wii's online capability, and Disc Fusion. Gamestop offered an exclusive version with a bonus DVD containing the top 10 television series battles as voted by fans on the release date. Ryo Mito stated that the game would feature never-before-seen characters made exclusively for the game, referring to the Saiyans' Great Ape forms. Budokai Tenkaichi 3 features 161 characters, almost the largest in any fighting game being topped by Tobal 2, for which Akira Toriyama was a designer.

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