The game's concept was created by Double Fine lead animator Tasha Harris, who now leads the game's development team, with Schafer supporting this and the three other projects as needed. Costume Quest is an action/RPG that follows a young boy trying to find his sister after she is lost while trick-or-treating on Halloween.

Costume Quest's combat is controlled by a menu-based RPG system with the options to attack, defend, and a special attack presented to the player. "Battle scenes grow the hero and his enemies to skyscraper sizes," writes UGO's Chris Plante. "The party costumes manifest literally: a shabby robot costume becomes a giant Mech, while the medieval sweater grows into a towering knight."

The Halloween theme presents an obvious release date for publisher THQ: October 31 for the PlayStation Network and Xbox Live Arcade.