NiGHTS: Journey of Dreams is a sequel to the 1996 Saturn title NiGHTS into Dreams... Like the original game, Journey of Dreams tells the story of the dream world of Nightopia which is being threatened by nightmare creatures called Nightmaren. The game introduces two children, William and Helen, and in their dreams the game takes place. The player controls the children and also Nights, a Nightmaren that turned against his creator in the previous game, and must protect the children's dreams from the Nightmaren.

The game begins with choosing a dreamer to play (William or Helen) and one of the seven worlds. The player can initially roam the world as the dreamer until he merges with Nights. Once Nights is controlled, the game turns to the traditional gameplay of gliding and spiraling through loops and collecting orbs and Dreamdrops.

During the game the player can obtain Persona Masks used to transform Nights into various animals and vehicles like a dragon, a dolphin, a rocket and a boat. These masks assist the player in reaching areas not accessible otherwise.

The game uses the Forecast Channel on the Wii to change the in-game weather conditions according to the weather at the geographic location of the player in the real world. That feature also comes to use in My Dream, a sandbox environment used to raise Nightmaren and other various creatures of Nightopia.

The game has four controls schemes: the Wii Remote, the Wii Remote with the Nunchuk, the GameCube controller and the Classic Controller. Players can keep track of their global ranking in an online scoreboard as the game informs the player of his global rank when playing.