Sheep is an action-packed puzzle game with bright, colorful graphics, a humorous premise, and plenty of challenging levels. The game begins with a short background story to set the stage and some simple tutorials to help familiarize you with the unusual controls and game mechanics. You then set out on the primary journey through a series of seven distinct worlds. However, soon into this journey, it'll become apparent that Sheep manages to blur the line between game and chore and that the game's eye-catching graphics and lighthearted cartoon humor don't completely make up for its inherent flaws.

The basic story of the game is that aliens landed on Earth millions of years ago and left a group of observers behind to keep track of Earth's inhabitants. Over the course of time these observers forgot their mission and slowly evolved to the point that they became indistinguishable from ordinary Earth creatures. Now the aliens have come back to save their comrades from the plans of an evil scientist, but to their dismay, they find that their comrades have lost all of their knowledge and common sense in the course of becoming what we know today as sheep. The aliens quickly round up a group of earthling candidates to rescue their brethren, and you assume the role of one of these four different herder characters: Bo Peep, Adam Half Pint, Motley, and Shep. Each character has slightly different herding attributes, but each character's mission is to round up as many sheep as possible and guide them carefully to safety through each level.

Each of the seven worlds in the game consists of four levels, and you can choose which of the four types of sheep to rescue on each level: pastoral, factoral, long wool, and neo genetics. Each type of sheep has unique attributes that govern its reaction to herding and its environment. To complete a level, a minimum number of sheep must be rescued in the given amount of time. The levels begin with a base group of sheep; in the beginning this number is fixed, and depending on your success in the levels, the number can increase, which in theory should make it easier to rescue the minimum number of sheep required.

You control the herder, using the keyboard, mouse, or joystick. When you use the mouse control, a small white dot, which is essentially the herder's target, appears on the screen. The herder will run after this dot, slowly if the dot is close by and faster if it is farther away. The effect is as if you had a rubber band attached from the dot to the herder and used it to drag the character around the screen. The sheep react to the herder much like opposing magnets react to each other. If the herder runs at them quickly, they run away, but the herder can also creep slowly to get closer without frightening the herd. Each sheep acts as an individual unit, and while they are primarily social creatures, they can easily get detached from the group and will require rounding up. In addition to their basic herding ability, herders can pick up sheep and throw them a short distance, shout at sheep to make them scatter, and gather power-ups such as radios and throbbing hearts to make the sheep act differently.