Old man Nebbercracker's house has come alive and threatens to eat anything that comes close to it, With Halloween fast approaching, the unaware neighborhood children are in danger of being made into a snack for the possessed house. However three of the neighborhood children, DJ, Jenny, and Chowder, are aware of the malevolent house and plan on putting a stop to it before it's to late.
In Monster House, players explore the innards of this haunted house, which is made up of several floors, including having a basement, attic, furnace, and a roof which will all be visited on the players march to defeat the house. Since the house doesn't want to risk flooding itself, it won't attack in the bathroom area and these are made into save points for the player.
The player takes on the role of the three children, with the children being able to be swapped in and out with one another. Each child has their own health meter and different skills with the water blaster their equipped with. They also have their own unique abilities, such as Jenny being able to crawl through small spaces, DJ being able to climb ladders, and Chowder being able to move heavy objects. Aside from finding keys to open locked doors, players can smash objects like vases to find restorative health items like candies and water droplets to refill their water blaster's tanks. The children can also use items like flashlights to see in dark rooms and camera flash cubes which will stun enemies when used. They can also use a Walkie-Talkie to contact their friend Skull, who helps give them directions on what to do next.
One of the house's rooms contains an arcade cabinet that contains the mini-game Thou Art Dead, in which the player controls an ax wielding man in a side-scrolling action game.