Gil Hammerstein and his crew are going to film a special episode of The New Adventures of Mermaidman & Barnacleboy, but the two heroes are missing, so SpongeBob and his friends volunteer to find them. They are also offered roles for the special episode. The Game Boy Advance version is split into four worlds – Mermalair, S.S. Rest Home, Goo Lagoon, and Sound Stage. Each world contains four levels, consisting of platforming levels, driving levels, and mini-games. By completing levels, some extra mini-games can be unlocked and in one level per world, the character who reaches the end of the level earns a role. After completing the four worlds, the Final Game is unlocked, allowing the player to play the events of the TV show through mini-games.

The main collectibles in the game are Golden Stars, which are used as in-game currency. The Golden Stars can be used to buy extra lives or mini-games. The Game Boy Advance version features four playable characters: SpongeBob SquarePants, Patrick Star, Sandy Cheeks, and Squidward Tentacles. While a character must be chosen before playing a level, the player can change characters any time in the game. Each character has their own set of abilities, akin to games such as Super Mario Bros. 2.