One criticism of the original Galactic Civilizations was its lack of ship design features. New ships simply became available when the appropriate technology was researched to create them. Galactic Civilizations II includes a highly-configurable 3D ship design editor. Technological research now unlocks components that the player uses to create their own custom ship designs in 3D from a variety of hull bases. The user's ships are rendered in real time and shown on both the main screen and in fleet battles.

Every ship is designed around a particular class of hull - tiny, small, cargo, medium, large and huge - and has a predetermined number of hit points and capacity. Each ship component takes up a certain amount of space. Technological advances can lead to enhanced components that take up less space (but which typically cost more to construct). Existing ships may be upgraded to use these new components, although it is often cheaper to use them as cannon fodder and replace them with newer ships.

There are three types of paired offense-defense mechanisms:

Defenses work best against the offensive weapon they are matched against. A defense mechanism used against a mismatched attack is diminished by the square root of the defense value (with a minimum of 1). For example, nine units of shield defenses would only afford the same protection as three units of armor when used to defend against mass drivers.

Engines are just another component, and become available in increasing power/size ratios with later research. Several extra components available at all times include sensors, life support (for extra range), colonization and construction modules. Each component may be added multiple times with summing effect; a player could create a fast long-range fighter with two lasers, two ion engines, a support module and a shield.

A wide variety of non-functional components - jewelry - such as wings, pylons, wheel structures and lights may be added for artistic purposes. These take up no space and are do not cost extra. There are several sets of jewelry, one of which is assigned to each race, though the player is not restricted to choosing from these.

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