A 3D platform game set in the Australian outback, Ty the Tasmanian Tiger offers players the chance to guide a boomerang-throwing carnivore on a quest to reunite with others of his species. Once Ty learns of a secret portal leading to a world of imprisoned Tasmanian Tigers, including members of his own family, he embarks on an outdoor adventure spanning four distinct regions: Bli Bli Station, Pippy Beach, Lake Burril, and Gate Zone. Each region consists of three or four levels, with environments ranging from rainforests and snow-capped mountains to the deep outback and Great Barrier Reef.

In addition to tossing boomerangs, which can be enhanced with new abilities, Ty can chomp, run, glide, and swim to defeat potential threats or to quickly advance through an area. Standing in the way of Ty's progress are 50 types of Australian animals, including a cantankerous cassowary named Boss Cass. As with many titles in the genre, players must also collect an assortment of items to unlock various game features. The primary goal is to acquire five missing talismans to free Ty's family, but players first need to find as many Thunder Eggs as possible to open gateways to the next region and to activate a Talisman Machine that will transport the talismans back home.

Each level is also filled with 300 Opals, which can be traded in for one Thunder Egg, five imprisoned critters called Bilbies, 25 Rainbow Scales, and 15 Golden Cogs. The latter allows Ty to acquire new boomerangs with added abilities, such as fire, a homing mechanism, explosives, and electrical charges. Players can also find picture frames hidden somewhere within each level to open up a gallery of artwork and movies. A variety of mini-games are sprinkled into the adventure as well, from collecting certain items within a time limit to herding animals into specially designated areas. Rewards for completing these tasks come in the form of Thunder Eggs.