The game is set in the Aztec underworld and charts the four-year progression of its protagonist, the skeletal Manny Calavera, through the land of the dead. Each of the four episodes begins on the Day of the Dead, and it is from this festival that much of the game's imagery is drawn - most of the game's characters are skeletal calacas figures, and marigolds are used (to beautiful but horrific effect) as tools of murder. Unusually, the game combines this traditional underworld with 1930s Art Deco design motifs and a dark, noirish plot reminiscent of Raymond Chandler. Most of the characters are Hispanic and the occasional Spanish word is interspersed into the English dialog. Most smoke (largely for cinematic effect) - but as the game points out "well, they are already dead".
Calavera, a genial character whose job combines being Grim Reaper with travel agent, turns detective when he discovers the righteous deceased are being denied their deserved post-mortem rewards. His investigations take him through a tangled web of corruption, deceit, and murder.
Grim Fandango was a bold attempt by LucasArts to rejuvenate the graphical adventure genre, which by 1998 was in a terminal decline, compounded by the rise in fashionability of the first-person shooter and real-time strategy genres. It was the first LucasArts adventure not to use the SCUMM engine. The new 3D characters and control system that the GrimE engine used gave the game a completely different feel and appearance to the SCUMM games, even though it preserved many LucasArts conventions in terms of puzzle and dialogue style (and the trademark inability to be killed or become entirely stuck).
Grim Fandango did not sell as well as many earlier adventures, but among those who did play it, it was generally considered one of the best LucasArts adventures in terms of plot and characterisation, if not in terms of control system. The plot is often cited as the most successful attempt in the LucasArts canon to combine humour with emotional involvement.