Told through a combination of pre-rendered cinematic sequences and in-game dialog, de Blob tells the story of Chroma City, its invasion by the INKT Corporation and its subsequent liberation by the titular Blob and the Color Underground.

Initially a lively and colorful city populated by its equally colorful and diverse citizens, the Raydians, Chroma City is suddenly invaded by the INKT Corporation. A corporate military dictatorship, INKT is led by the villainous Comrade Black and dedicated to the eradication of color through its "War on Color". Chroma City quickly falls to the invading army of Inkies and color-draining Leechbots, leaving its landscape barren, its flora withered and its fauna in hiding. The citizens are rounded up and turned into "Graydians", encased in homogeneous gray prison suits distinguished only by a bar code on the back of each shell. The Graydians are forced to serve as both menial labor and as a living resource of ink, the latter of which is mined literally from their sadness.

Blob witnesses the takeover of Chroma City from his jungle retreat and goes into action, first rescuing the only remaining pocket of resistance, the Color Underground. Blob joins the group, and under their orders, begins to win back sections of the city and arouse the vicious ire of Comrade Black. In response, Black orders everything from propaganda campaigns to the creation of super soldiers in an attempt to stop Blob, though to no avail.

With nearly all of Chroma City in control of the Color Underground, Comrade Black desperately orders all his troops to retreat to his spaceship in Lake Raydia, and attempts to launch all the stolen color into a black hole where it will be lost forever. However, Blob manages to stowaway onto the spaceship and defeat Black, then detonates a device that devours the spacecraft in a burst of color and whimsy. With the Raydians finally safe, Blob returns to his jungle retreat, napping on a tree as he was at the story's beginning.