Daxter offers a completely new perspective on the Jak and Daxter universe by placing him as the main character, allowing players to finally step into the role of the witty sidekick. Daxter aims to set the standard for character action games on the PSP while steering the Jak and Daxter universe in new directions, enabling players to experience it from a completely different viewpoint.

The game takes place during the two years Daxter spends trying to find and rescue Jak, who was captured during the events leading up to Jak II. Daxter is now on his own in an unknown location and quickly realizes that being small and furry is not exactly beneficial for his chances of survival.

Daxter takes on the job of an exterminator to combat a mysterious bug infestation. He explores parts of Haven City and gathers clues to find Jak.