Careening through space from his defeat in The Neverhood, Klogg eventually lands on Planet Idznak, which is populated by generally-dimwitted creatures called Skullmonkeys. He quickly disguises himself as one of them, is shortly-thereafter named their leader, and begins using them in his plan to create Evil Engine Number Nine. Jerrio, the sole intelligent Skullmonkey, sees this and sends out a call for help in the form of a winged suit, which attaches itself to Klaymen and flies him over to Idznak. Klaymen is initially confused by his predicament, but eventually receives a communique from Jerrio that explains the situation midway through the game.
The game is entirely shot with stop-motion animation, mainly made up of malleable clay models, but occasionally diverging into live-action territory (such as with the boss Joe-Head-Joe, whose torso is made up of the head of an actual person).
After every few worlds, the player is treated to an animated FMV interlude. Sometimes these interludes connect with the plot, other times they act as funny and engaging skits to keep the player motivated throughout his or her journey.
Skullmonkeys's soundtrack was composed by Terry S. Taylor, and continues the Neverhood tradition of music with a wide variety of instruments and nonsense vocals. The soundtrack is fully available on his two-disc compilation, Imaginarium: Songs from the Neverhood.
Skullmonkeys is a fast-paced two-dimensional platformer. Players take control of Klaymen as he progresses toward the goal of each stage. Klaymen is piloted through traditional platformer controls (walking, running, jumping on enemies' heads to kill them), but with a few twists:
- Klaymen has a gun, with which he fires a limited supply of pellets. Homing pellets are sometimes available.
- Klaymen shortly gains the ability to "phart" out clones made of gas. Players can use these clones to progress through the level without fear of losing a life; if the clone reaches the end of the level, he automatically becomes the real Klaymen.
- If he collects 100 clay balls, he gets an extra life.
- If he collects a halo, he can withstand an extra hit from enemies.
- If he collects a pink orb, he can grow huge and destroy all enemies onscreen.
- If he collects a Willie Trombone head, he can make Willie's head pop out of his chest -- causing all items to gravitate toward him.
- If he bumps into a hamster, three hamsters immediately surround him and shield him from damage.
- In some later levels, he gains a yellow bird that allows him to glide.
- If he collects three swirls throughout a level, he can choose to go to a "bonus room" at the end of each level, during which he's serenaded by an encouraging acoustic guitar song.
- If he collects three 1970s tokens throughout the entire game, he can go back to a bonus room that takes place in the 1970s.
There are also occasional levels where Klaymen must pilot a vehicle (The Amazing Drivy Finn/The Incredible Drivy Runn), each with their own mechanics. The Drivy Finn is piloted via a top-down interface, where Klaymen must carefully move it through the underwater level without hitting mines; the Drivy Runn is an autoscrolling level where Klaymen simply makes the vehicle jump to avoid spikes/collect bonuses.
The player is taken through the game's ninety levels one-after-the-other, with no navigable world map and no way to replay previous levels for bonuses. Additionally, Skullmonkeys has often been given negative marks for featuring a password system in place of a memory save. This, combined with the game's notorious difficulty, has made the ending difficult to come across.
Skullmonkeys has 90 levels split up into 17 worlds:
- Science Center
- Monkey Shrines
- Hard Boiler
- Elevated Structure of Terror
- Skullmonkeys' Brand Hotdogs
- YNT Weeds
- YNT Eggs
- YNT Mines
- YNT Death Garden
- Monk Rushmore
- Soar Head
- Worm Graveyard
- The Incredible Drivy Runn
- Castle De Los Muertos
- Evil Engine No. 9
Skullmonkeys has five bosses: Shriney Guard, Joe-Head-Joe, Glenn Yntis, Monkey Mage, and Klogg.