Every year, a mysterious man named Calypso sends e-mails to renowned drivers, inviting them to compete in a tournament called Twisted Metal. The conditions of the tournament are anything but ordinary: opponents fight each other in armored vehicles with mounted weapons. The winner receives an audience with Calypso, and is granted a single wish - a wish without limits, be it money, power, or even our reality itself. In 2005, the annual tournament is held again in Los Angeles, and twelve drivers, each with his own agenda, have come to compete to death.

Twisted Metal is a vehicular combat game. The player selects one of the twelve available drivers and takes part in the competition. In the one-player story mode, the player must progress through six combat stages; all the opponents must be destroyed in order to win the race. In the two-player co-op mode, players choose a battlefield and control two cars in an attempt to get rid of the competition.

All the vehicles are equipped with two mounted machine guns; though relatively weak, they have unlimited ammunition. Other weapons can be picked up by driving over them during the races. These include fire and homing missiles, land mines, tire spikes, and others. Each participant has a life bar, which can be replenished by entering a specific area on the stage.