Monsters, Inc.: Scream Arena is based on the 2001 Pixar film. Set after the movie, the employees of Monsters, Inc. now produce energy by making children laugh instead of scaring them. One good way of doing that is having the monsters knock each other over with balls, resulting in a dodgeball-like game.

The game includes 13 characters and 7 arenas based on locations from the film. At the start of a single-player game, only 5 characters and the training arena are accessible, others have to be unlocked by advancing through the levels. There are 5 levels for each arena, for a total of 35 levels plus one final challenge. Selectable characters vary in speed and throwing power.

Goals vary between levels and include scoring more points than the opponents, being the last monster standing, hitting a number of targets, or holding on to a special ball the longest. Balls spawn on the ground and must be picked up and thrown at opponents or targets to score points, knock off one of their lives or free a held ball. To avoid being hit, balls can be blocked or dodged. Various special balls with unique properties exist. These include stun balls that knock out opponents temporarily, bubble balls that trap them in a soap bubble, yo-yo balls that come back to the thrower, pet balls that follow their owners around, and many more.

Multiplayer modes include Buddy, which is a two-player co-op mode, Team, which allows two-versus-two matchups, and Party, which is free-for-all four a maximum of four players. Arenas and characters must be unlocked in single-player mode.