The main objective in Sheep's Quest is to direct a flock of sheep to an exit avoiding hazards along the way. The sheep blindly march along, only turning when they reach a blockage, such as a wall or other barrier. By placing arrows on the maze-like board, guide them where they should go. To finish a level and open the exit, all coins must be collected (as well as keys in some levels) by walking a sheep over them. Reach the destination by guiding them around falling boxes, trees and the like, and keeping them from falling into holes or running into enemies. Coins gathered are used to upgrade their farm.

Higher levels introduce variations such as jumping between sections of the playfield trampoline-style between sections of the play field, or hopping into trucks to ferret them around. Various power-ups can be gathered to speed them up or make them invincible for a short time.

In addition to the Lemmings-like gameplay are bonus levels in between each of the seven worlds. Sheep jump from the top of a barn or other structure and must be caught and bounced across the screen and over a fence. The level is won when the specified number of sheep have successfully jumped over.

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