Beat the main Story Mode on any difficulty multiple times to unlock an extra stage and more characters.

Unlockable	How to unlock
Alice	Beat Story Mode twice.
Bunny Girl Snow White	Beat Story Mode three times.
Dorothy	Reach Stage 2-1 in Story Mode.
Little Red Riding Hood	Beat Story Mode four times.
Snow White	Reach Stage 3-2 in Story Mode.
Survival Stage in Arcade Mode (Pirate Ship)	Beat Story Mode once.