ToeJam & Earl takes place from a 3/4 perspective in a 2D game world. Its gameplay mechanics were inspired by Rogue, which has led it to be compared to genres like Roguelikes or dungeon-crawlers.[12][13] The game contains both single-player and two-player cooperative modes. The latter displays a single screen when both characters are near each other, but splits it apart when they are not.[5] Playing the game with two players reveals dialogue and jokes between the characters not heard in the single player game.[5][8]
The game is set on Earth, which is represented by randomly generated islands that float in space,[12] each one a layer above the last. They are connected by elevators. Some islands contain pieces of spacecraft wreckage, of which the player must collect 10 to win the game.[5] The player character drops to the island below if he falls from an island's edge, which necessitates that the player again locate an elevator.[8] Each island is populated by antagonistic "Earthlings", such as phantom ice-cream trucks, aggressive packs of "nerds", giant hamsters, Bogeymen, man-eating mailboxes, and chickens armed with mortars that shoot tomatoes.[5][8][14] Certain Earthlings aid the player.[5] The game has been described as "largely non-violent",[15] as the protagonists can only attack enemies with thrown tomatoes—one of many temporary, randomly generated power-ups.[5]