Nightmare Ned

The game's main hub is on a quilt which resembles the one on Ned's bed. From here, Ned can travel through adventure portals into five different nightmare worlds: Ned's Graveyard Nightmare; Ned's School Nightmare; Ned's Medical Nightmare; Ned's Nightmare in the Attic, Basement and Beyond; and Ned's Bathroom Nightmare. Each nightmare world has for its boss a "shadow creature" that, through exploration of the world, eventually reveals itself to be someone or something harmless. A player can travel back to the quilt an unlimited amount of times, but whether or not the player receives the "good" ending is dependent upon traveling back eight or fewer times, representing eight hours of sleep. Each world features hidden passages between them.

The game generally features a sidescrolling interface, but utilizes multiple layers to create depth. A gamepad, joystick, or keyboard can be used as input options. Ned's yo-yo serves as the main weapon against enemies.

10-year-old Ned Needlemeyer (Courtland Mead) arrives home after school and discovers that he has his home to himself, with his parents and baby sister away for the evening. After eating a large amount of junk food and playing video games, he hears a thunderstorm begin to brew. The power goes out, and he decides to go to bed; on his way to his bedroom, what appear to be five "shadow creatures" inhibit his bed's quilt. While sleeping, Ned envisions an enormous pair of hands dragging him into a universe of nightmares linked together by a giant quilt. He must successfully trek through five nightmare worlds, each with a unique theme and cast of characters based on one of his fears, in order to overcome them.

In the game's "bad" ending, Ned wakes up the next morning and is greeted by his mother, but he is still afraid and runs out of his bedroom, while the voices of the shadow creatures, heard coming from behind a closet door, lament and argue about their failure to catch him. In the "good" ending, the true, harmless identities of the shadow creatures rally at the quilt to help Ned stop the being that brought him into the nightmare universe: a giant, monstrous Ned. As Ned attacks his monster self, he changes it into a normal copy of himself, then rips open a portal in the quilt and falls back into his own bed, waking up with his fears conquered and greeted by both of his parents. The shadow creatures are heard wondering what to do now that Ned no longer fears them.

The idea for the game was pitched before the television show started production and the two were later developed alongside each other. Donovan Cook, producer of the TV series, described the collaboration: "We actually shared a lot of ideas as we went along. [...] There's some crossover.

We sent them our graphics. [...] We had to have our art done right away and they ended up influenced by it along the way". Unlike the TV series, the animation in the game used digital ink and paint.

Nightmare Ned was critically acclaimed. The game received praise from Time, who noted the game as a departure from Disney's typical releases. PC Mag described the game as "so packed with great graphics and original songs that it makes other kids titles look anemic by comparison". SuperKids also praised the graphics, describing them as "slick" and using "state-of-the-art technology", but they also noted that the game had little educational value.

Popular Science wrote that the "detailed background imagery" made the game feel "especially chilling". D. Magazine compared the game to works of Tim Burton and described it as "really sophisticated", writing that Nightmare Ned was "pushing not only gaming and illustration for kids, but also advancing ideas about game-space". Computer Gaming World said that the game had a "Nightmare Before Christmas feel."