The player controls a diminutive character named the Prince as he rolls around an adhesive ball called a "katamari" to collect increasingly larger objects, ranging from coins to pencils to buildings, in order to build stars as ordered by his father, the King of All Cosmos.

The game was given a larger budget and staff compared to the original, with Takahashi leading a team of 30 employees to create it.

The standard game mode is "Make A Star", where the katamari must grow to a specific size as determined by the King.

After completing his goal to recreate the stars in the sky, the King of All Cosmos was surprised to discover that he had many fans down on Earth.

After losing first place in a boxing tournament, the Emperor throws his son's second-place trophy into the river out of disappointment.

At some undisclosed time, after an argument concerning a strawberry shortcake, the future King runs away from home and gets into fights with street punks who in one altercation slice off the front of his pompadour haircut.

Later that evening, the future king spies his father deep in thought, staring at the second-place boxing trophy.

Suddenly, he hears the sound of a baby crying in the delivery room, as he rushes to investigate, and a nurse appears from a doorway to call him.

Later, the King and the Queen are then shown happily looking down at their son, the Prince of All Cosmos, newly born and wrapped in a blanket, the character that the player controls during the game.

[10] Namco already began work on a follow-up to Katamari in the form of a Christmas-themed version of the original, without involvement from Takahashi.

[12] This stemmed from Takahashi's gripe towards defining games with traditional methods, such as displaying product descriptions on the front of its cover art.

[12] The development team chose to name the sequel We Love Katamari in reference to this concept, as well as the level structure focusing around taking requests from fictional fans.

Takahashi and the development staff created these modes as it encouraged teamwork and gave players a sense of accomplishment.

[12] The game was released in Japan on July 7, 2005 as Minna Daisuki Katamari Damacy (Everyone Loves Katamari Damacy);[13][12] its cover art, featuring the development team cheering outside Namco's head office in Yaguchi, Ōta,[14] was created to further emphasize its centering around fanservice.

[31] The Sydney Morning Herald praised the game, stating that "the way the scale changes seamlessly is incredibly cunning with areas becoming accessible and later off-limits again according to the size of your flotsam-encrusted orb".

[25] The Times gave it a favorable review and stated that "what's most important about We Love Katamari is that it represents a move in which Electronic Arts, the world's biggest games publisher, has been prepared to release a title that is new, entertaining, and ultimately original".

Game Informer noted that the music was just as artsy as its predecessor and found dogs barking the theme song brilliant.

[22] Eurogamer thought the music was better than its predecessor and noted that songs previously introduced being re-recorded with a wider range of vocals and the addition of classical pieces[20] GameSpot noted that unlike its predecessor, the music of the game is less focused on catchiness and moves into a more experimental direction.