Following a format change from the first season, League C was expanded from 15 to 16 teams. The league will consist of UEFA members ranked from 33–48 in the 2018–19 UEFA Nations League overall ranking, to be split into four groups of four. Each team will play six matches within their group, using the home-and-away round-robin format on double matchdays in September, October and November 2020. The winners of each group will be promoted to the 2022–23 UEFA Nations League B, and the fourth-placed team of each group will advance to the relegation play-outs.
As League C has four groups while League D has only two, the two League C teams which are to be relegated will be determined by play-outs in March 2022. Based on the Nations League overall ranking, the best-ranked team will face the fourth-ranked team, and the second-ranked team will face the third-ranked team. Two ties will be played over two legs, with each team playing one leg at home (the higher-ranked team will host the second leg). The team that scores more goals on aggregate over the two legs will remain in League C, while the loser will be relegated to League D. If the aggregate score is level, the away goals rule is applied, with extra time played if away goals are also equal. The away goals rule is again applied after extra time, with a penalty shoot-out used to decide the winner if no goals are scored during extra time.
In the 2020–21 access list, UEFA ranked teams based on the 2018–19 Nations League overall ranking, with a slight modification: teams which were originally relegated in the previous season were ranked immediately below teams promoted prior to the format change. The seeding pots for the league phase were confirmed 4 December 2019, and were based on the access list ranking.
The relegation play-outs of League C are scheduled on the same dates as the 2022 FIFA World Cup qualifying play-offs. If one or more of the teams due to participate in the relegation play-outs also qualifies for the World Cup qualifying play-offs, the relegation play-outs will be cancelled and the teams in League C ranked 47th and 48th in the Nations League overall ranking will be automatically relegated.
Times are CET/CEST,[note 2] as listed by UEFA (local times, if different, are in parentheses).