The players sit in a circle, and everyone is given a card telling them who they are. You can't show your card to anyone, and your identities remain a secret until it is strategically advantageous to reveal them. The majority of players are simple Peasants, but there are also: the Hunter, with the power to shoot any player he/she suspects is the Werewolf with a silver bullet; the Witch, with the power to protect another player (or him/herself) from the Werewolf, but never the same person twice in a row; the Elder, who is given confusing clues as to the identity of the Werewolf (like whether the Werewolf is sitting next to the Witch, etc.); and of course the Werewolf him/herself.
The game is divided into night and day. During the night, all the players have to close their eyes so as not to discover the others' identities. The person running the game then asks the Witch to open his/her eyes and indicate who they want to protect, then the Witch has to close his/her eyes again. It moves on to the Elder, who gets a clue (in the form of a yes or no question -- "Is the Werewolf sitting next to the Hunter?" -- that the other players don't hear the answer to because it is given as a nod or a shaking of the head), then the Werewolf is asked who they want to kill, and the Hunter is asked who, if anyone, they want to shoot.
After the night round comes the day, when everyone opens their eyes again to discover who has been mauled to death and who might be dead from a silver bullet. Then everyone argues over who they think the Werewolf is in prime "The Monsters are Due on Maple Street" fashion. (Every time I was accused of being the Werewolf, I accused them all of being anti-Semites, but it didn't seem to matter.) As paranoia sweeps the Village and brother turns against brother, as it were, the risk gets higher that the Hunter might wind up accidentally shooting an innocent Peasant, or one of the important characters like the Witch or the Elder -- especially if the Village reaches a majority on who they believe the Werewolf is, because then the Hunter must either shoot that person or no one at all. And the Hunter has only a limited amount of silver bullets!
Every third or fourth night, depending on how many people are playing, is the full moon, which means the Werewolf has an option of either killing two people or turning another player into a second Werewolf. And let me tell you, when there are two Werewolves involved, the game gets crazy!
The above description may seem complicated, but once you start playing it's incredibly easy to pick up.
After playing three games last night -- they go pretty fast, considering -- I was totally hooked. I can't wait to play again!