Punky Duck is a combination of shoot-em-up, platform and adventure games where the titular young hero finds himself alone on an island after taking a nap while his friends are being held captive by monsters who have invaded the country called Duckland. His mission is to travel from island to island, rescue his friends and rid the land of all the monsters. This does not only require all his courage but also much skill to collect weapons, ammunition, dollars and other items along the way, which he can use to fight the monsters. He needs to be clever too since on every island there is a plan that tells him how to build the vehicle necessary to reach the next island. Only if our hero finds the plan, all the parts required to build the vehicle and fights the big boss on every island he can advance to the next level. There are in total five islands, each with a different theme, like desert, polar and volcanic lands. Once he has reached the last island he can finally rescue his friends and Duckland.

The game features a typical 3-D third-person-view of the main character and the surroundings. You can run around, shoot monsters and collect items. The game also features a map of each island, and you can collect a compass which shows where you are heading. When you collect the jetpack it is also possible to fly around until you are out of fuel. Other items include invincibility which allows you to walk on deadly plants, an item to increase your fire rate, extra lives and dollars. On every island there is also a shop where you can trade your money for items.