Accompanied by newfound friend Latisha, original funk masters ToeJam and Earl have returned to Earth in search of Funkopotumus' vinyl record collection, otherwise known as the 12 Sacred Albums of Funk. Once on the planet, however, it becomes apparent that all is not well: the Anti-Funk has caused a disturbance in the Funk. The three oddly colored natives of Funkotron must save the day.
To accomplish their mission, the trio will need to scour five different zones (Country, Urban, Water, Desert, and Snow), each consisting of multiple levels. Objectives include "funkifying" all the earthlings in a level as well as uncovering all the presents within. Once the objectives are completed, players can board an elevator that will whisk them to the next level. Armed with the power of funk-fu, players will need to repel the advances of malicious cheerleaders, rabbits, dentists, hula girls, and more, while collecting keys that will grant them access to new worlds.
Completing objectives rewards players with points used to earn higher funk-fu belts, which increase the wearer's health and attack power. As in previous games in the series, the presents strewn about the levels contain power-ups that can be utilized by the extraterrestrial protagonists, including roller skates, angel wings, spring shoes, inflatable decoys, and other fanciful gadgets. Money can also be acquired and spent on food items, such as sushi to replenish lost health.
As was the case with the original Genesis version, levels are randomly generated and can be played by two players cooperatively. Both characters will appear on the same screen when in close proximity of one another, but as they stray further apart, the screen will split in two, allowing each player to explore wherever they desire. Providing support for the Xbox Live broadband service, ToeJam & Earl III: Mission to Earth lets players download new content, such as additional characters, more environments to explore, and other surprises.