The game opens with an old ragtime-style cutscene in which it conveys the biography of Sweet Tooth, the long-time star of the series. The Twisted Metal carnival of vehicular combat and destruction arrives in young Sweet Tooth's town, prompting him to enter into the tournament. This competition is held by the leader, Calypso, who promises "any wish the victor could possibly desire" as a grand prize. The cost of losing though, is the participant's immortal soul. Sweet Tooth creates his insane, clown-like persona and enters the contest. He soon rises to the top, and wins, in his machine-gun outfitted ice cream truck. Upon winning the contest, he enters Calypso's trailer and wishes to be "the star of Twisted Metal." Calypso grants Sweet Tooth's wish, which is used to explain his head of flames. From then on, Sweet Tooth competes and wins each and every tournament he enters, remaining the top contestant. That is, until he begins to envy Calypso's position as the carnival's master of ceremonies. At this point, he overthrows Calypso, and takes control of his empire with the help of his clown minions. This is where the player's story begins.
The story mode consists of eight levels. The player's objective in each of these levels is to destroy all of your opponents before they destroy you. If you succeed, you then face the boss battle before advancing to the next stage. Various power ups are scattered throughout the map, including missiles, health, and environmental weapons. A weapon selector resides in the bottom-right of the screen which displays the player's currently selected weapon, and can be cycled through by pressing L1 and R1. A map of the level is located in the top-left of the screen which displays the locations of enemies. Lastly, there is a section in the lower-left of the screen which displays the player's health and turbo, among other things. Turbo increases the speed of the player's vehicle when the button is held, allowing the player to reach previously inaccessible areas or escape from combat situations quickly.
There are also numerous multiplayer levels with a Tron-esque look to them, however they are not detailed here because they are not very complex.
- Construction Yard (Crusher) - Sectioned off into four sizable areas, with four conveyor belts dividing them. A player-controlled magnetic crane in the center is capable of picking up enemies once the doors are blown off the control room. Once grabbed by the crane, enemies cannot remove themselves from it and may be placed into one of two fire pits, dealing a great deal of damage. Crusher is a construction vehicle which has 2 hydraulic arms protruding from the front of the vehicle used in his special weapon to pick up and repeatedly smash the enemy between them.
- Neon City (Moon Buggy) - Includes a lower street level and an upper rooftop level which are connected by a subway system. An destructible subway train runs on the system and will do significant damage to a player caught in its path. A secret balcony on the rooftops reveals a hover-train that will pick up and drop off players to a location filled with advantageous power ups. Moon Buggy's special weapon, quasars, consists of 3 balls of energy connected by lightning which pick up and throw around an enemy while damaging it.
- Road Rage (Super Thumper) - A series of highways and tunnels with various secret destructible walls leading to special power ups. Super Thumper shoots 2 flame jets from the front of the car for his special weapon.
- Bedroom (RC Car) - Implies that everyone's car has become matchbox-sized and is driving around inside a kid's bedroom. Breaking the lamp reveals a lightning power up used to shock any opponent out in the open at the time of activation. RC Car sports a giant laser atop his vehicle, which fires in a straight line.
- Amazonia 3000 B.C. (Super Axel) - Ancient ruins surrounded by the Amazonian jungle with secret underground areas. Features an underground lake of green fuel which can be set on fire. Super Axel is essentially the same Axel from the previous games, with a shock wave-like special weapon.
- Oil Rig (Super Auger/Super Slam) - A complex, multi-level oil rig with a cycling helicopter that drops off a health power up each time it touches down at the helicopter pad. This is also the only level in story mode in which it is possible to fall to your death, but the cheat, hyperspace, allows for teleportation to random location on the map, escaping death. Super Auger uses a drill, mounted on the front of his vehicle, to impale enemies. Super Slam is basically just a bulldozer, and uses his shovel to pick up and appropriately slam down enemies repeatedly.
- Minion's Maze ( Minion) - A dark and complex maze which contains the same green flammable fuel found in the Amazonian level. Features teleporters at opposite corners of the map for fast travel. Minion is a massive tank which has a basic missile attack.
- The Carnival ( Sweet Tooth) - A round area with a few large tents surrounded by a destructible roller coaster which circles the carnival. Also contains a haunted house and underground tunnel leading to it. Sweet Tooth's special weapon is a devastating gang of spirit minions who swarm enemies and fire projectiles from close range.
This installment of the series features 13 characters which are available from the start, and each boss becomes playable after defeating them. Veterans of the previous games make an appearance along with many new characters. Among the numerous weapon pick-ups spread throughout the maps, each driver has their own special weapon which regenerates over time.
- Goggle Eyes (Roach Coach) - "Goggle Eyes sprays a green, hydrochloric, toxic acid which causes on contact, massive damage."
- Meter Maid (3 Wheeled Meter Car) - "Meter Maid releases an energy circumference that siphons an opponent's health unto her own."
- Micro Blast (Toy Car) - "Micro Blast engages a series of rapid fire, speed missiles called the gatlinger."
- Captain Grimm (Pirate Ship Car) - "Captain Grimm shoots a fiery cannon ball that sets fire to and damages heavily any opponent."
- Rob Zombie (Dragula) - "Mr. Zombie fires a spinning skull which draws enemies in as it electrifies, then explodes at it's final stage."
- Trash Man (Garbage Truck) - "Using large hydraulic arms, Trash Man picks up and slams his opponents repeatedly onto spikes mounted on his roof."
- General Warthog (WWI Tank) - "General Warthog plants a marker target which initializes an ion satellite and later activates a powerful ion blast."
- Calypso (Nuke Mobile) - "Calypso employs powerful nuclear missiles which must be detonated near his opponents."
- Drag Queen (Hot Rodder) - "Drag Queen's flame thrower projects forward from the car's grille and sets opponent's on fire."
- Pizza Boy (Illegal Street Racer) - "Pizza Boy sends out two giant, spinning pizza saw blades that home in on an opponent."
- Orbital (Sleek Sports Car) - "Orbital's special is the teleorb. It electrifies the enemy and then freezes them."
- Quatro (Xeon Hoverbike) - "Quatro sends out a pulse of microwave radiation around his hover-trike that severely damages opponents."
- The Joneses (Family Wagon) - "The Joneses launch three strong, homing missiles called hornets which causes heavy damage on an opponent."
There is also a car creator, with a limited number of basic vehicle types and special weapons which may be combined to form a personalized character for use in the game. One of the many pre-made voice clips can also be assigned, which will play when the special weapon is fired.
Features 10 songs, 3 of which are performed by Rob Zombie, who also has his own character and car in the game.
- "Dragula" - Rob Zombie
- "Grease Paint And Monkey Brains" - Rob Zombie
- "Superbeast" - Rob Zombie
- "Time's Running Out" - Cirrus
- "A More Violent Approach" - One Minute Silence
- "South Central" - One Minute Silence
- "And Some Ya Lose" - One Minute Silence
- "Chaos" - Skold
- "Alien Magnet" - Ghoulspoon
- "Lighting Strikes" - Cypress Hill