Looney Tunes: Acme Arsenal is set in a world where an evil mad scientist named Dr. Frankenbeans has created a time machine to destroy the Looney Tunes world by erasing their ancestors with an army of robots. The players must control Bugs Bunny, Daffy Duck, Tazmanian Devil, Foghorn Leghorn, Marvin the Martian and Gossamer as they travel through different time periods to fight off Dr. Frankenbeans' robot soldiers.
The gameplay involves similar actions such as jumping, punching, shooting, and basic 3D platforming. The players can switch between characters if one dies, cycling through the list until the player must restart from the last checkpoint. A weapon vending machine is available to produce a variety of items, including freeze guns, shotguns, and cartoonish weapons like bear-trap launching guns.
The game features a multiplayer option with similar gameplay to the single-player mode, but has some exclusive content on the Playstation 2 version, such as an additional level and character skins.