Set off with a friend through a wild, woolly world in this grand Yoshi adventure! A treasure trove of clever handicraft stages are ready for you to explore. Unravel their secrets and color your world with a spectrum of yarn balls to knit new paths and get every last collectible. Knitting yarn, patchwork, and other handicraft materials combine into a whimsical and crafty backdrop for our knit Yoshi to explore. Instead of eggs, this time Yoshi tosses yarn balls that he can use to clear blocked paths, tangle-up enemies, or even knit together platforms and warp pipes. Yoshi can also tug at stray yarn to unravel walls and reveal hard-to-reach areas filled with hidden collectibles. Tackle challenges in local 2-Player co-op by partnering up with a friend. Gobble 'em up and spit 'em out to reach new heights or take out craftwork creepers like paratroopas, piranha plants and shy guys! It's time to get crafty.

The game's story revolves around Craft Island, a peaceful island for the Yoshis. One day, Kamek turns all but two of the Yoshis into Wonder Wools as a favor to Baby Bowser, who wishes to use the accumulated yarn to construct a new castle in his name. When the remaining two Yoshis notice Kamek inadvertently dropping Wonder Wools around the areas next to Craft Island, they set out on a quest to collect them all and thus restore all of the unwoven Yoshis. After Baby Bowser is defeated at his castle, Kamek uses his remaining Wonder Wools to make him more powerful. Despite this, Baby Bowser is defeated again, returning all of the remaining unwoven Yoshis back to normal. The Yoshis return to Craft Island, while Baby Bowser takes some time to "think about what he's done".