40 Winks is a 3D action-platform game in which you play as Ruff or Tumble, two children who must battle ghosts, goblins and other monsters in their dream-world. They must try to capture 40 winks scattered around the world in order to stop an evil old man named Nitekap. Nitekap wants to turn the winks into hood-winks, the things responsible for nightmares. You also have to find the 12 dream keys to unlock the boss level. A unique aspect of the game allows the players to temporarily morph into different costumes with special abilities. The costumes include a Prehistoric Man, Jester, Super Hero, and Ninja.

The Nintendo 64 version has a two-player co-op mode where the players, although not able to directly harm, can propel each other's movements through kicks and punches. The game's default screen resolution is Normal, which is fuzzy, low resolution and runs at a quick speed, but the Expansion Pak allows for two additional screen resolutions: Medium, which is less fuzzy and has more graphical detail, and Hicol, which is the cleanest-looking mode, adds lighting effects, but also is a bit choppier in terms of frame rate.