The overall style of the cars and characters is based on vinyl art and collectors' toys, but players are able to greatly modify their clothing and overall look. Players are able to design and create their own characters, vehicles and race tracks in great detail. When the game was first announced, it was likened to LittleBigPlanet to highlight the game's emphasis on customization. Players can start chats using text, voice or gestures. The ModSpot contains Race Station which has Online Race, Quick Race, Split-Screen and Career (Story Mode), Creation Station, where players create their Mods, Karts and Tracks, and also share and shop points, Top Mods, Top Karts and Top Tracks, Coming Attractions to view upcoming DLC, Hot Lap where players can try to earn the best times on a track and a News Update screen. Players can meet up, race, and create and download content.

ModSpot is the main lobby area for ModNation Racers.

In addition to the emphasis on user-generated content, the game includes a full-fledged single-player mode featuring a story by professional Hollywood writers. For example, a first level sonic attack emits a series of rings around the player knocking nearby opponents off the track while a third level sonic attack sends the rings forward, knocking all racers ahead of the player off of the track. Players are able to collect weapons as they race which can be upgraded to up to three levels of power, weapons include sonic attacks, missiles and lightning strikes. The meter resembles a multi-tiered thermometer which allows players to the choice of activating a turbo boost to increase the kart's speed, a shield to protect their kart from incoming attacks or sideswiping other racers. Players are able to accelerate and drift, successful drifts allow players to fill their boost meter.

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