Characters:

Cecil:
-Cecil brings back his sword, gathers energy, and shoots blue-black waves at all the enemies on the screen. Each time this technique is used, he looses HP.

Tellah:
-Tellah remembers a black spell, on all enemies. This can be a powerful weapon if Tellah unleashes a strong spell when its remembered. Tellah doesn't always remeber though. The downside to this is, after the voyage to Mt. Ordeals Tellah loses this ability.

Edward:
Has Medicine, and heals all HP in the party, but sometimes ineffective.

Rosa:
Has Prayer, and heals all HP in the party, but sometimes ineffective.

Yang:
Yang "Gather"s his strength for one extra turn, and deals twice the damage to an enemy.

Palom:
Has Strengthen, which increases Palom's magic power for the battle.

Porom:
Has a Fake Cry, which increases the party's chance for escaping from battle.

FuSoYa:
FuSoYa casts Spirit Wave, which casts Regen on the party. The downside is that he becomes frozen for the rest of the battle.

Article Source: Kuponut.com : Final Fantasy 2 Differences  :  http://www.kuponut.com/cheats/ff2/differences.html