SpongeBob draws a hero called DoodlePants and then the player fights the evil doodles that DoodleBob has created.
The game begins with the clumsy artist out at sea on a small boat drawing when he drops two pencils into the ocean. One of the pencils lands on Patrick's head (while he was practicing his counting) and the other pencil lands a far distance behind him. Patrick recalls that the pencil can bring drawings to life, however, there is one thing he is not allowed to draw. He sketches the forbidden drawing on the ground trying to remember it. The drawing turns out to be DoodleBob (from a SpongeBob episode, "Frankendoodle," in season 2) who springs back to life, steals Patrick's pencil, and runs off to downtown Bikini Bottom.
Patrick is really worried of what he has done but is then visited by SpongeBob. When Patrick tells SpongeBob of DoodleBob's return, he too becomes worried. When SpongeBob tries to find a solution, he finds the second pencil, which he and Patrick can use to draw a hero to fend off DoodleBob's evil. This is where the player is able to draw their hero. SpongeBob and Patrick name the hero DoodlePants but shortly after his creation, SpongeBob is captured by DoodleBob's Doodle Dude Army.
After SpongeBob's rescue, the trio are informed by Squidward that Bikini Bottom is in complete turmoil ever since DoodleBob's return. DoodlePants then must try to bring all of the Bikini Bottom residents back. After four levels, DoodlePants, SpongeBob, Patrick, and Squidward come to the presence of a giant Doodle Tower which is creating Doodle Dudes. DoodlePants then climbs to the top of the building and fights a giant Doodle Robot, named Doodled. When the Robot is defeated, the group then catches up with DoodleBob, who runs into the forest with a rocket and a submarine. The group reaches a drawn pyramid which is where DoodleBob is hiding. DoodlePants goes in to fight DoodleBob but before he's fully defeated, he escapes the pyramid and disappears. The group suspects that either DoodleBob used the submarine to go to the deeper part of the ocean or the rocket to the moon. They go to the deep Pacific which consists of Rock Bottom and The Flying Dutchman's Graveyard. When they reach the Dutchman's Ship, The Flying Dutchman tells them that they are responsible for Doodle Dudes taking over his ship. He is informed of this by Doodle Patrick, Patrick's much more intelligent drawn counterpart. DoodlePants, SpongeBob, Patrick, and Squidward deny this but when Patrick slips out that he brought DoodleBob back to life, The Flying Dutchman puts the group in charge of getting rid of the Doodle Dudes from his ship. After this, DoodlePants must defeat Doodle Patrick after escaping ghosts in the ship. When Doodle Patrick is defeated, the Dutchman will figure out that it was him who ruined his ship. DoodleBob is not there, so the player must draw a rocket to go to space. After you beat that level and go to space and beat more levels, you'll find a replica of Bikini Bottom, containing DoodleBob. After you beat DoodleBob once and for all, Squidward says to erase DoodleBob but SpongeBob figures that DoodleBob just wanted friends, and the player has to draw a smiling face on DoodleBob. SpongeBob, Patrick, and Squidward return home to Bikini Bottom, and DoodlePants and DoodleBob, who is now good and friends with everyone, stay on the moon together. The credits roll, and then Notebook World, a bonus world, is unlocked, and after the gameplay goes sideways and upside down for the player's screen, the last boss to beat in the bonus world, is the Squid Doodle that Patrick had drawn in the episode, Frankendoodle.
It also takes place after Help Wanted and Sandy's Rocket because SpongeBob has his job, and Sandy references when SpongeBob trashed her rocket.
Squid Doodle makes his second appearance, being the bonus boss after beating the game.
During the course of the game, the player will be asked to draw a moon for Bikini Bottom. The moon is also the fourth world for gameplay, making it the only drawn object in the game that serves as a world for gameplay.
However, regardless of how the player draws the moon, the world of the moon will always have the same design: a realistic-appearing moon design.