Digimon Racing is a racing video game that utilizes characters and elements from Digimon as well as those of traditional racing games. The game follows a group of Digimon competing in a racing tournament within the Digital World, home to all Digimon. The purpose of the grand prix is to determine who is the best racer; thus, they use specially designed karts that equate all contestants in terms of ability.

Digimon Racing's gameplay largely resembles that of traditional racing games. It focuses on competing against seven CPU-controlled characters in cup races consisting of three laps. The usage of items to attack opponents and improve one's own condition is an integral part of the gameplay, and adds an element of kart racing games. A new feature in the game is "kart hopping": using the karts to jump onto opponents, slowing them down. This adds an element of action gameplay. Digivolution, a recurring theme in Digimon, also plays a role in the game. Driving over energy hotspots scattered throughout the tracks increases an energy meter located at the bottom left of the game's HUD. As the meter increases, the player traverses the Digimon's evolutionary line, becoming more powerful and ultimately gaining the ability to use a special attack.

The game's fifteen tracks—four of which are available immediately—are based on conventional video game environments such as jungles, volcanoes, and cities. After completing a track for the first time, the player unlocks a time trial mode for this track, and a boss battle. The action-oriented boss battles involve defeating a generally static Digimon using items scattered throughout the areas, which are not designed as race tracks. The player can also compete in single races unrelated to the story in any unlocked tracks. The game uses the Game Boy Advance Wireless Adapter or Game Link Cable accessories for a multiplayer racing mode supporting up to four players.