With the help of his friends, SpongeBob must use Plankton's memory machine to retrace the happiest moments of his life (because according to SpongeBob, he cannot remember anything when he feels sad) to find the Krabby Patty formula in time for the Krusty Krab's "eleventy-seventh" anniversary.

After destroying it, SpongeBob tells Mr. Krabs the formula is in the safe, but then finds out it was in his back pocket the whole time.

Players can turn SpongeBob into a Sledgehammer Smash to whack intruders, a WaterBob sponge to spew water, a giant spatula, a spinning blade (or a spinning pirate ship steering wheel), a MuscleBob BuffPants, or even an Explosive Cannon to aim and blast baddies.

Two levels are exclusive to the PSP and DS versions, Bikini Bottom and The Krusty Krab.

Corey Cohen of Official Xbox Magazine rated the game 4 out of 10 and considered it boring, while criticizing its "tedious" levels and "irritating" camera.