Happy Tree Friends: False Alarm is based on the Happy Tree Friends flash cartoon series where cutely drawn animals end up in bloody massacres and accidents. It was aired on G4 (US) and MTV (worldwide). Through 30 scenarios with ten different themes, Lumpy must guide the other characters (Flippy, Nutty, Giggles, Russell, Flaky, Toothy and The Mole) safely to the end of the stage.
Players cannot directly influence the characters as they simply keep on walking. In Lemmings-style, the player needs to interact with a physics-based environment filled with traps and hazards. Possible actions include ice (for instance to freeze water or steam), fire (makes the character run faster as well), explosives and a general action button. Some of the locations include a candy factory, a mine shaft, a museum and a hospital. By pointing at the portraits near the top of the screen, the walking order can be changed. Not all friends need to be changed as long as some reach the end of the level. Players can also scroll through the level to preview the dangers ahead.
The game includes a new episode of the series split up into two parts.