Crazy Taxi is an arcade-like racer where the player takes the role of a taxi driver who weaves his way through crowded streets, across sidewalks, and even underwater, in a wild and frantic race to deliver passengers on time. The courses are largely set inside cities crowded with general traffic and pedestrians (which can't be run over, they dive away). The main goal is to bring as many customers as possible to their destination in time. Available customers are marked through circles and the color represents the distance and the fare they offer. Green means long rides with plenty of money, and red ones are very short.

In the main Arcade mode, there is a timer that quickly runs down. It can be replenished by picking up customers. While driving reckless maneuvers are encouraged. Players can disregard all traffic rules and customers give extra tips for speedy and dangerous driving, but these can only be cashed when the customer arrives at his destination in time. By the same token, the reward at the end of a ride is based on the amount of time left, as each customer also has a personal timer. The city is filled with slopes and jumps, and the game uses a very loose driving model. No damage can be done to the car, so driving as fast as possible is encouraged. While driving players can toy with the gears to perform two special tricks: a crazy drift and a crazy boost to speed up more quickly.

Next to the Arcade mode, there is an Original mode and Crazy Box where specific goals need to be met on closed-down courses. In the regular modes, it is possible to disregard the usual timer and play for a fixed amount of minutes. At the end of the race, the player is rewarded with a license, either D, C, B, or A, with S for outstanding performance. Next to the interactive courses from the arcade version, there is a new course for home consoles. There are four cabs and drivers to choose from. The cars have different statistics and the drivers' different attitudes while racing. The game has a soundtrack featuring The Offspring and Bad Religion (not for the Xbox 360 version).