Four difficulty levels may be selected when starting a character in Torchlight II. All four are available from the start; they do not need to be unlocked.
- Casual - Casual mode is intended to be fun "for all ages" without significant challenge.
- Normal - Normal is for players new to the genre, who wish to experience some challenge, but it does not require deep knowledge of the game's mechanics.
- Veteran - Veteran is intended for players familiar with Torchlight and games of this genre.
- Elite - Elite is the highest level of difficulty. It is likely that you will die.
Difficulty levels affect monster health and damage. Item drops are not affected, except that gold drops are 20% greater in Casual.
Note that a character's difficulty is mainly important for single player. In multiplayer, the difficulty level is determined by the game session's creator. Any character may join a game of any difficulty.
In multiplayer, monster damage and health are scaled up based on how many players are in the nearby area. Players who are not near each other do not affect each other's difficulty, nor do they share experience.
Hardcore is another option that may be set on character creation. In hardcore, death is permanent. A dead hardcore character will continue to appear in the character list as a ghost until deleted.
New Game Plus
- Main article: New Game Plus
New Game Plus allows an existing character who has finished the main campaign to play though again at higher level. In this mode, all monsters are scaled up in level. It exists independently of difficulty level.