Hy,
how do you play this game? I can use WASD to navigate but how can turn my ship up and down?
I don't want to buy a joystick only for this game, I want to play with mouse and keyboard.

The game was never optimised for mouse and keyboard unfortunately. I did push for this myself during development but it wasn't considered a priority by the rest of the team.
There is a mouse control ini file out there, but it didn't work that well last time I tried it. It might be better with a modern high DPI mouse though.

You have to remember that this game was produced nearly 10 years ago when it was expected PC gamers to have a joystick, and most did.
The menu system was designed around a joystick hat and I had to point out to other team members that not all joysticks had a feature, which is why it's also bound to the arrow keys.
You may find thar utilities like GlovePie or PPjoy allow you to bind mouse movements as joystick movements.
Like I said their is a mouse control ini file out there, it might be worth giving that a try. I'll have a look when I get home and see if I've still got a copy and upload it.

It's around 3 or 4 months older than Aquanox, where you could use keyboard & mouse, so that's not an argument.

I'm not trying to argue with you - I'm trying to help you and provide a bit of context from someone who actually worked on the game.
I regret my influence at the time wasn't enough to give you the feature you require. Optimised mouse flight controls are something I thought necessary and it definitely would have opened up the game to a wider audience.
I've dug through my old work files and found the mouse control file, and atttached it to this post. The GOG forums don't support non-graphical attachments, so rename it to MOUSE.INI after you've downloaded it. Then place the MOUSE.INI file in the CONFIGS folder of your I-War 2 installation.
I hope you find it useful.

I've been dying to play this again, but there's no chance I'm buying a joystick, can anyone confirm this mouse.ini does the trick?

I'm not trying to argue with you, too. I-War 2 is one of the best games I've played since ~1990, I love it. I loved it in 2001 and I still love it now.
I just wanted to mention that this lack of mouse support isn't just because I-War 2 was produced nearly ten years ago. That's all.
Thanks for that mouse.ini, I'll give it a try.

Well the first space sim to have properly optimised flight controls for mouse and keyboard was Freelancer. They made a big thing of it at the time.
Apart from that all space sims of that era were heavily oriented towards joystick, or if you didn't have a joystick you were stuck with keyboard. You could fly Tie Fighter using a mouse for example, but it was awful.
There was a lot of resistance to putting in optimised mouse flight controls into I-War 2 precisely because at that time it was the exception rather than the norm. I did try :)

Yeah I do remember. I had a Joystick, too (around 1996), already got one for my C64, but around year 1998 I switched over to gamepads.
I tested your mouse.ini, thanks again for that, and it worked, but not how it should be. So I stay at the keyboard/gamepad-configuration, which is a pleasure anyway.
One thing I want to mention again: Thanks for that game, it's a masterpiece!

Does anyone know whether this game will support a USB Logitech Extreme 3D Pro Joystick?
I think the Joystick was made about a year ago and has about 12 buttons.
It also has a speed thing you can move up and down to decrease or increase the speed of the aircraft.
have used this Joystick successfully on Lucasarts Secret Weapons over Normandy. Which is I think 7 years old now and quite possibly a future candidate for GOG as well.
I Just want to at least have some assurance that it will work okay with more modern Joysticks as I can't stand using the Keyboard for flight and space sims.
I don't know how everyone else manages to play these games with the mouse and keyboard. I find it so difficult playing these types of games that way.

For all of your control setup needs:
There was a small utility program made just for I-War 2 by a certain Peter Tan. It is hosted on the I-War 2 site and you can downloaded it directly here. Just run the utility and bind your keys from there. It will create an .ini file just for your joystick/setup configuration.

I-War 2 works fine with modern USB joysticks - you may have to reconfigure the config to match your button layout, but it works fine. It was designed to be extremely flexible and configurable when it came to all types of game controllers and keyboard controls. (But not mice unfortunately, at least not for flight controls).
That control config utility that sfried posted will do the job of helping you config the game.

Thanks a lot for the quick response and assistance Sfried and Ravenger. I downloaded the app and now I will proceed to purchase and download I-War 2.

heh, Guess I'm the only person who actually DID buy a joystick for this game..
playing it with a joystick just feel 'right'