In Gizmo's story, the cute Mogwai has to prevent Stripe from ruining Christmas for Kingston Falls by retrieving all the presents that Stripe has stolen. Gizmo uses a flashlight to kill gremlins after rolling into a ball and weakening the gremlins. He also must destroy any gremlins that get in his way. In Stripe's story, he comes up with a scheme to destroy his mortal enemy Gizmo and destroy mogwais.

If playing as Gizmo, all the enemies are generic gremlins. If playing as Stripe, the player will instead fight mogwais.