Out on an island in the Pacific Ocean, toys known as Squeeballs are being produced. However, only the Squeeballs that pass rigorous quality assurance tests are allowed to be sold in stores. So it's up to the player, who takes on the role of a tester, to see which Squeeballs are up to snuff.

Squeeballs Party is a collection of over 150 mini-games. The game features eleven different game types with up to fourteen different challenges (variations) for each game type. The game types are as follows:

• 10 Pin Bowling - Throw a bowling ball down a lane and knock down the bowling pins which have Squeeballs sitting on top of them.
• Cannon - Players swat Squeeballs, that are fired from a cannon, with a racquet.
• Cooking - Players follow recipes to make food by using motion control movements.
• Paint by Squeeball - Slingshot Squeeballs to splatter them onto a canvas that has a drawing on it, in order to fill it in with color.
• Shock - Players need to use precision movement in order to move a ring through a shock wire.
• Stampede - Squeeballs rush toward the screen and the player must shoot at them before the entire screen fills up.
• Crazy Lanes - Bowling that takes place on a lake of lava. Players actually get to take direct control of the bowling ball.
• Feeding Frenzy - Players have to shoot the correctly colored Squeeballs into the mouths of the charging El Toro Squeeballs.
• Pumping - Players inflate a Snorgle Squeeball with hot air and then guide it towards a target while it deflates in mid-air.
• Golf - Slingshot a Squeeball into the air and then skip it on water while trying to land on a target.
• Squeeball Testing Belt - Do various harm to Squeeballs as they come out of a conveyer belt by utilizing the correct motion depending on the Squeeball currently being tested.

The main gameplay modes offered include the Challenge Ladder mode, the Single and Party Game modes, and a Head-to-Head mode.

The game records the players high scores, keeps track of various statistics (such as how many Squeeballs were tested on), and the player can even unlock character bios for individual Squeeball types.