After the vague and surreal ending of Monkey Island 2, Guybrush Threepwood is inexplicably found on the sea in a floating bumper car with two helium balloons. Guybrush is trying to recall in his journal how he ended up in this dire situation and his escape from the Big Whoop where he was trapped for an undisclosed period of time. He eventually approaches Plunder Island, which is governed by Elaine Marley and is currently under siege by LeChuckhimself. After a lengthy exchange where LeChuck is rebuffed in his attempts to woo Elaine, both notice Guybrush, and he is quickly recaptured by LeChuck. While seeking a way out, Guybrush causes LeChuck to blast himself to smithereens, finds a diamond ring in LeChuck's treasure hold, and escapes the ship whilst sinking it. He then reunites with his love, Elaine Marley, and officially proposes to her, offering her the diamond ring he found on LeChuck's ship. Unbeknownst to him is the fact that the ring is cursed, and Elaine gets turned into a gold statue as soon as she puts it on. Guybrush must then retrieve the statue, which is stolen almost immediately, and return her to human form.
The Voodoo Lady tells Guybrush that he must travel to Blood Island to find a certain uncursed diamond ring to break the spell. In doing so, he must get a crew, a ship, the statue of Elaine, and a map as nobody knows where Blood Island is anymore. In his attempts to get a crew, Guybrush hastily informs a captain named René Rottingham about his plan to go to Blood Island, which piques his curiosity. The map also presents a problem as the only known map is tattooed to the back of Palido Domingo, who is tanning on an exclusive beach and does not cooperate in his quest. Guybrush must also find out where the statue of Elaine is hidden. After various competitions, Guybrush manages to do all of the errands, as well as gather a crew, consisting of Cutthroat Bill, Haggis McMutton, and Edward Van Helgen, to join him on a voyage to Blood Island.
While sailing to Blood Island, the crew is distracted by sightseeing whilst Captain Rottingham boards the ship and fights Guybrush in a game of insult swordfighting. Rottingham easily wins and takes the map to Blood Island. By fighting other pirates, Guybrush learns various insults and defeats Rottingham, reclaiming the map. However, a terrible storm results in Guybrush's ship crashing into Blood Island, the golden statue of Elaine being launched inland, and the crew deciding to mutiny; leaving Guybrush on his own again. On Blood Island, Guybrush meets Griswold Goodsoup and other locals, including the cannibals fromMonkey Island, and even has to feign death (at least twice) in order to complete his quest. Guybrush then removes the cursed ring from Elaine's finger, gambles with smugglers to acquire an uncursed diamond, and returns Elaine to normal. The two share a moment together before LeChuck's skeletal army seizes them.
After a lengthy conversation with LeChuck, Guybrush is transformed into a child and left to roam the Big Whoop amusement park. Using a hangover cure discovered on Blood Island, he becomes an adult again and gets on the Rollercoaster of Death to confront LeChuck. In an unseen cinematic, Elaine reroutes the tracks, causing Guybrush to go through the same sections of the ride over and over, avoiding the lava. LeChuck chases Guybrush over and over, tormenting him with his fiery powers. Regardless, Guybrush manages to gather up various items to set off an avalanche, freezing and burying LeChuck under his own theme park. Some time later, Guybrush and Elaine are seen sailing off on a ship just married, as various friends he met on his adventures wave them goodbye.
The Curse of Monkey Island received almost uniformly positive reviews from the media. Computer Gaming World said that "it joins LucasArts' hallowed pantheon of comic classics", and that "computer gaming rarely gets more entertaining than this". GameSpot praised the graphical style for making the game "as much fun to watch as it is to play". Just Adventure emphasized that the "music is the best I've ever heard in a game; [...] it never stops and it's never annoying; it's always a joy". RPGFan commented that the "additions of detailed graphics and actual spoken dialogue managed to take the already hilarious story to a whole new level". Adventure Classic Gaming addressed plot criticism, saying "some [...] may criticize the numerous farfetched plot twists in this game", while "some may just call it creative writing!", and Adrenaline Vault likened The Curse of Monkey Island to the adventure genre as a whole, saying: "The twin vitals of an adventure game are a good plot coupled with strong dialogue. This game has both, in spades."
Although Adventure Gamers cited the graphic style's "refusal to take itself seriously" was adding "immensely to the game's charm", they found the secondary characters "criminally underdeveloped" and the ending "an anticlimax, leaving the player thinking he could have done so much more, if only the game’s programmers had let him". The abrupt ending of the game received criticism from GameSpot, Just Adventure and Computer Gaming World; the last of which called the ending "the game's only real disappointment". PC Zone described that due to the introduction of cartoon-ish graphics "for Monkey devotees of the first two titles something tiny and almost intangible has been lost", while still scoring the game a 92/100, praising the voice over work and humor of the game.