A kangaroo named Kao was playing with his friends in his native Australia, when suddenly evil hunters appeared, put him in a cage, and took him away. They didn't know that Kao was quite proficient in the art of boxing, so freeing himself from the trap wasn't particularly hard. However, Kao finds himself far away from home, and must fight and hop his way back.

Kao the Kangaroo is a 3D platform action game. The gameplay adheres to the jump-and-run style, Kao having to rapidly traverse levels full of traps and enemies. His basic attack is a simple punch; he can also side-step and swing his tail at the enemies. Power-ups scattered through the stages include coins, a certain amount of which will increase Kao's life points; hearts to replenish his health; boxing gloves, which act as homing projectile attacks; and turbo boosts, which make Kao move faster.