Banjo the bear and his breegull pal, Kazooie, have been inactive for years after a long period of playing video games and eating pizza. Their arch-nemesis, Gruntilda (now just a skull), returns to Spiral Mountain with a goal of starting another fight. However, their rivalry is put to an end by the Lord Of Games, who confiscates Grunty's magic and Kazooie's special moves. L.O.G. proposes a challenge: the winner gets the title deed to Spiral Mountain, while the loser will spend eternity in his video game factory.
Banjo-Kazooie: Nuts & Bolts is a sequel to Banjo-Kazooie . Players explore Showdown Town, where Mumbo's Garage allows them to build any vehicle they like as long as it has an engine, fuel, and a seat. The player must then use their vehicles to complete challenges in various worlds created by L.O.G.. Completing each challenge earns Jiggies, which can be used to unlock more worlds and eventually face Grunty for the title deed.
The game also allows players to compete against others online through Xbox Live, as well as share blueprints of their vehicles, video replays of challenges, and in-game photos.