Peggle Extreme

Within the game's main "Adventure" mode, Peggle is divided into fifty-five levels. Each level features an arrangement of approximately one hundred blue "pegs" positioned to correspond with the level's background picture, inside of three walls on the top and sides (leaving the bottom opened), along with other fixed and moving features. The goal of each level is to clear the board of the twenty-five random pegs that are turned orange at the start of the level, by using a ball launcher located at the top center of the screen to strike one or more of the pegs. Pegs light up when hit, and once the ball either falls through the bottom of the screen or is caught by the ball catcher that moves back and forth along the bottom in a fixed manner, the pegs will be removed.

Struck pegs are also removed if the ball is stuck on them. The player begins each level with ten balls (twelve on the non-Touch iPod version) to clear the orange pegs but may earn more by landing the ball in the ball catcher or earning high scores on single shots. Failure to clear the board with the allotted number of balls will require the player to restart the level while completing this objective will allow the player to progress to the next board.

Peggle was originally envisioned by PopCap's studio director, Sukhbir Sidhu, who was inspired by pachinko machines. However, he recognized that pachinko was mostly luck-based, and would not translate well into a video game. After seeing a 2D game engine created by PopCap programmer Brian Rothstein, Sidhu was able to realize his game and worked with Rothstein for the first five months of its development before bringing in additional programmers. Initial designs focused on bringing together elements of pachinko with Breakout.

The team initially incorporated a "rapid-fire" mechanic used in pachinko, along with numerous moving targets; however, they found this made the levels either too fast-paced or too demanding of the player. They found over time that a static field of pegs provided a more enjoyable experience for the player; the path of the ball would be more predictable, leading to the gameplay mechanic requiring only a random subset of orange pegs to be cleared. Once the team had established the core mechanics of the game, they brought on character artist Walter Wilson, background artist Marcia Broderick and an additional coder, Eric Tams, to help complete Peggle within its two-year development period. Even with their game established, Sidhu and Rothstein faced internal challenges at PopCap to increase the level of interactivity with the game, but the two defended their vision of the game.

Peggle was well received by critics. Alec Meer of Eurogamer found the game to be a "constant series of rewards" in gameplay, graphics, and audio that would continue to satisfy the player. V. Club considered the game "comfort food for the omnivorous gamer" with its ability to draw even hardcore gamers into its fantasy visuals.

IGN's Erik Brudvig cited Peggle as being "simple enough for anybody to pick up and instantly start having fun". The Xbox Live version was seen as truthful to the PC version, and while the Peggle Party mode was considered an interesting addition, Dan Whitehead of Eurogamer felt it was a "curiously remote approach" that did not fully integrate a multiplayer experience into the game, a point also stated by Mastrapa who lamented the lack of online leaderboards.