While on vacation, Tails and Sonic come across a recruiting advertisement for the World Grand Prix race. Sonic is not interested at first, but once he notices that Dr. Robotnik will participate he decides to enter. Robotnik is only interested in the race because he's learned the location of the Chaos Emeralds and now he'll get a chance to beat Sonic while he gets them. Knuckles finds out that Sonic will participate, so he joins him. Amy overhears Robotnik's plan, so she will also be racing to get the Chaos Emeralds.

There are many modes of gameplay in Sonic R:

Grand Prix: You race against the rest of the characters on each of the circuits, and get a chance to race the level's boss to unlock some of the extra playable characters.

Time Attack: Run on one of the tracks as fast as you can, get 5 balloons or tag 4 characters.

Multi Player: 4 players on a split-screen or over a network. You can race against up to three players or challenge them on a balloon finding game. The screen can be divided horizontally or vertically for 2 player games.