Space Quest III: The Pirates of Pestulon continues the hilarious space-faring adventures of Roger Wilco, the unlikely hero and intergalactic garbageman. In this installment, players must unravel the mystery behind the disappearance of the "Two Guys from Andromeda," the fictional creators of the Space Quest series. As Roger, players navigate through a satirical sci-fi universe, facing off against the nefarious Pirates of Pestulon and possibly other suspects, including overzealous fans and revenge-seeking minions of previous villain Sludge Vohaul. With its blend of point-and-click adventure gameplay, cutting-edge graphics for its time, and trademark humor, Space Quest III challenges players to save the kidnapped game designers and thwart another galactic threat, all while delivering a self-aware, comical take on the adventure game genre and sci-fi tropes.

Roger Wilco's escape pod from the end of Space Quest II is floating in space until it is picked up by an automated garbage freighter. Finding a derelict spaceship amongst the freighter's garbage, Roger sets out to repair the Aluminum Mallard and leave the scow.

Roger visits a variety of locations, including a fast food restaurant called Monolith Burger and a desert planet called Phleebhut. At the latter, he encounters trouble, as Arnoid the Annihilator (an Arnold Schwarzenegger-like android terminator) hunts him for not paying for a whistle in Space Quest II (a continuity error in that the order form for the whistle clearly stated that it was in fact free). From information he picks up there and at Monolith Burger, Roger eventually discovers the sinister activities of a video game company known as ScumSoft, run by the "Pirates of Pestulon".

Pestulon, a small moon of the volcanic planet Ortega, is covered in soft, moss-like vegetation, and dotted with twisted tree-like growths throughout. Elmo Pug, the CEO of ScumSoft, has abducted the Two Guys from Andromeda and is forcing them to design awful games.

Roger manages to sneak into the supposedly impregnable ScumSoft building and rescue the two programmers. He is discovered, and must battle Pug in a game that combines giant Mecha-style combat with Rock 'Em Sock 'Em Robots. After winning, Roger and the Two Guys escape. In the game's conclusion, Roger delivers the two game designers to Sierra On-Line's president, Ken Williams, on Earth.