Combat in Dungeon Overlord is instantaneous and automatic. There are no "high level" decisions to make on attacking beyond the unit combinations sent. It is possible to submit 5 round delays between creatures, which permits a strategy of "Disarm and Tank." Defense consists primarily of dungeon layout, traps, and "hiding" or "defending" with your creatures. Creatures "On Mission" cannot defend, so it is possible to defend with only some of your forces.

Combat Replays are available against the weakest Settlement only for NPC combat. Combat Replays are available if you win in PvP, providing valuable intelligence on your target, giving information on the layout, traps, mines, beds, safe storage, room levels and more. To "win" a combat and receive a replay, it is not necessary to defeat all or any creatures. It is required to survive, so a single Thief who stealths through the entire dungeon while his comrades all die will achieve a "team victory" after looting the target and returning home. Once a unit enters combat, it must destroy the units nearby. The AI appears erratic, sometimes wandering off in the middle of combat. It is unknown if "wandering off" and looting can achieve victory.

Combat occurs in rounds, with a maximum of 1800. Each unit has initiative, to determine the order in which they attack. The Traps have initiative 0, so they attack first if they have targets in range. Each unit has a move, which determines the number of rounds that must pass before they are allowed to move again. Combat speed is the number of rounds that pass before they can attack again, so a Combat Speed 1 attacks 3 times as often as a Combat Speed 3.

Special abilities have timers, that determine the number of rounds before they can be used again. Special ability targeting and range also appears erratic, as heal can occur outside the stated range. Each unit has 2-4 special abilities, with Stealth Detection at a rate of 2% present on all creatures, allowing them to spot Stealth creatues like Ghost and Thief. Thief has the most abilities, with a level based Stealth Detection, Stealth, Disarm Trap and Backstab. The decision to use abilities, move to the target room, or engage in combat also appears erratic.

There are currently three kinds of combat: Player vs NPC Raid Settlement which generates Hate (see Hate Generation ); Player vs Player Raid which attempts to loot resources; Player vs Player Pillaging which attempts to destroy Furniture for the target room. Pillaging is only possible when several conditions are met: attacking from an expansion dungeon, attacking to an expansion dungeon, creatures have a Pillage rating. ( Ogre, Vampire, Death Knight, Balrog, Arch Fiend )

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