12 sacred Albums of Funk are missing from the planet Funkotron and it's believed that they are on Earth. The funky duo, ToeJam & Earl; along with their new friend, Latisha; take it on themselves to recover them. Later they discover a disturbance in the funk balance and have to deal with the evil side of the funk - the 'Anti-Funk'.

The gameplay involves running around randomly generated 3D areas, and neutralizing earthlings with "funk fu"; all the while searching for and picking up items and powerups.

The 2-player mode plays as 2-player cooperative, where the screen splits when the players move apart and joins back when they're together.