As high-school nerd Chip McCallahan, players must venture through a series of increasingly-difficult labyrinths in the school's science library to impress Melinda the Mental Marvel and gain membership to the exclusive "Bit Busters Club". Armed only with the ability to push blocks (similar to the Sokoban series) and collect power-ups (allowing him to walk on dangerous and unreliable surfaces), Chip must collect all computer chips and reach the exit in the time limit while avoiding numerous obstacles.
The game received ports to multiple computer systems in 1990, namely the Amiga, Atari ST, Amstrad CPC, Commodore 64, ZX Spectrum, and MS-DOS PCs. All of these were published by U.S. Gold and most of which were ported by Images Software (with the exception of the MS-DOS version, which was ported by Audio Visual Magic).
It was later ported by Tony Krueger and Ed Halley for Microsoft as part of the company's 1992 Microsoft Entertainment Pack 4 compilation for Windows PCs. This version features numerous differences (including simplified animation) and was later included in The Best of Microsoft Entertainment Pack.
A sequel to Chip's Challenge, called Chip's Challenge 2, was in development for Windows PCs in 1999 by the original lead designer, Chuck Sommerville. However, copyright issues prevented it from being legally released then. After numerous spiritual successors by Sommerville's later indie studio Niffler in the 2010s (including Chuck's Challenge and its 3D sequel, and the licensed spin-off Ben 10 Game Generator and its sequel), both Chip's Challenge 2 and an updated version of the original game (as Chip's Challenge 1, using the sequel's game engine) were digitally released via Steam on May 28, 2015. Chip's Challenge 1 was later made free on September 21, 2020.
The gameplay of Chip's Challenge is simple. The player must navigate through 144 levels (not including bonus ones) collecting computer chips in order to proceed to the next level. The first 8 levels are lesson levels, designed to help the player understand the challenges present in the game. Chip also has to deal with hazards and puzzles such as locked doors, monsters, trap doors, etc to proceed. Blocks may also be needed to move or used to get further through the levels. Chip can be moved by the mouse button or the arrow keys, and has to collect all the chips to pass the socket and reach the exit square. Not all levels have sockets, so Chip may only need to find his way around the level to reach the exit square. Each level also had a unique password used to save the player's progress through the game.