Featuring characters from the award-winning PBS series, Sesame Street Sports consists of six racing events designed for younger audiences. Each side-scrolling course offers a number of items to collect and obstacles to avoid on the way to the finish line. All six events are represented by one of the following Muppets: Ernie, Telly, Cookie Monster, Grover, Zoe, and Elmo.

The method used to race depends on the character or course. Elmo rolls his way across the city on in-line skates, while Zoe prefers riding her Big Wheel along a country road. Grover peddles a unicycle down the boardwalk, and Cookie Monster bounces through the park on his Hippity Hop Ball. Ernie paddles down a river in his bathtub, but Telly enjoys sledding down a mountain on a snow saucer.

Objects to collect also depend on the selected character or course, so Ernie will be able to catch rubber duckies and Cookie Monster can munch on chocolate chip cookies. The total number of acquired items appears in the top-right corner of the screen, while a clock appears on the left. Once a race is completed, players can try again to beat their time or collect more items.