In a search for power, a short evil genius called Erwin has found a way to suck raw energy out of the world of the Ghosts (the Spectral Realm).

Pac-Man is attacked by fiery Spectral monsters of the orange, green, and purple varieties which have been driven mad by Erwin's hypnosis with Inky and Blinky (Clyde) have been kidnapped as part of Erwin's evil scheme, but Pinky and Clyde (Blinky) managed to escape.

Pac-Man must join forces with the ghosts, Orson, Pinky, and Clyde (Blinky) to stop Erwin before he destroys both the Real World and the Spectral Realm.

The Butt-Bounce move is now modified so that it can only be done three times at once, but the third bounce creates a small shockwave that slightly extends the radius of the attack.

B-Doings also reappear but now only serve to launch Pac-Man into a single predetermined direction, and Pac-Dot Chains are now generated by machines that are activated using crystals with the same color.

The game also features more elements of story, with a plot that is fleshed out by cutscenes and voiced character dialogue.

For unknown reasons, the game was scrapped and later reworked into Pac-Man World 3, with Bluth no longer involved.