At a summer camp for up-and-coming psychics, a young boy named Raz arrives unexpectedly. He is allowed to stay until his father comes to pick him up, but his arrival coincides with strange circumstances. Soon, evidence that someone is psychically tampering with the campers' minds reveals itself, and Raz is the only one who can stop it. His journey requires him to project himself into the psyches of several different people in order to figure out what is going on and who is behind the recent occurrences.
Psychonauts is a 3D platform game with a unique style. The characters' inner worlds are the game's levels, which reflect the personality of each person whose psyche it represents. This often results in surreal creations that influence the gameplay style. For example, the psyche of a giant lungfish presents itself as a city populated by fish people, where Raz becomes a giant monster who can destroy entire buildings; the psyche of a mental patient is a huge board game, where Raz must command armies to defeat Napoleon, and so on.
Common gameplay elements include fighting regular enemies, defeating level bosses, collecting currency, "figments of imagination" needed to upgrade his powers, and bonus items such as complete sets of the character's memories. Many puzzles require the usage of psychic powers, which Raz obtains in a strict order. These powers range from combat abilities like Psy Shield to Telekinesis (moving objects without touching them) and Clairvoyance (reading other people's minds).
The camp serves as the game's "hub", where the player can explore, interact with characters, search for secret areas and items, and so on.