CarnEvil is set in the fictional town of Greely Valley, Iowa, wherein the protagonist (called "Jacob" in the manual) takes a tour through the town cemetery. According to the story's premise, if a golden token is inserted into the mouth of the jester's head on top of the tombstone of "Professor Ludwig von Tökkentäkker", a haunted amusement park will appear after long absence. Jacob and his friend Lisa investigate this legend, and fulfill the conditions of the premise; whereupon the jester's head comes to life and raises the undead carnival from the ground, all trying to take their brains. During this process, Jacob obtains a shotgun from the shooting gallery at the entrance to fight through hordes of monsters, zombies, and insects. Jacob faces enemies in the three attractions - the Haunted House, Rickety Town, and Freak Show - and must defeat a strong 'boss character' at the end of each, as well as periodic sub-bosses. After escaping all three areas, he enters the Big Top, and fights clowns and circus animals to reach the center ring, whence he is taken to Tökkentäkker's zeppelin to face Tökkentäkker and his jester Umlaut. Tökkentäkker is defeated when the player strikes him into the zeppelin's propellers, causing both to collapse. Thereafter Jacob wakes in the cemetery, which has returned to normal. Seeing the token emerge from Tökkentäkker's tombstone, he re-inserts it while Lisa orders him not to do so.