The objective of each level in Crayon Physics Deluxe is to guide a ball from a predetermined start point so that it touches all of the stars placed on the level. The ball and nearly all objects on the screen are affected by gravity. The player cannot control the ball directly, but rather must influence the ball's movement by drawing physical objects on the screen. Depending on how the object is drawn, it becomes a rigid surface, a pivot point, a wheel or a rope, and the object can then interact with the ball by hitting it, providing a surface to roll on, dragging, carrying or launching the ball, etc. The player can also nudge the ball left or right by clicking on it, and in some levels, rockets appear and can be used as part of the solution.
The game challenges players to come up with creative solutions to each puzzle, and provides additional rewards for elegant solutions that don't rely on "brute force methods". It comes with more than seventy levels, and also features a level editor and an online Playground, where players can upload and download custom levels.
Crayon Physics, the original prototype of this game, is Purho's tenth "rapid-prototype project" inspired by the rules of the Experimental Gameplay Project, and was developed in five days using resources freely available under a Creative Commons license. The game was inspired by descriptions Purho had heard of the children's book Harold and the Purple Crayon. On June 10, 2007, Purho announced that he would be developing a level editor to permit user-created levels, although by June 15 fans of the game had already worked out the level format and had released new levels for the game. The level editor was released on June 30. Crayon Physics was built with Simple DirectMedia Layer middle-layer and released as freeware.
On October 12, 2007, Purho announced Crayon Physics Deluxe, which would feature an intuitive level editor, more levels, and a modification to the game engine to preserve the player's drawings instead of turning them into rectangles. The follow-up took a year and eight months to develop. It won the Seumas McNally Grand Prize at the Independent Games Festival in February 2008. Chris Baker of Slate Magazine also wrote that Crayon Physics Deluxe was more talked about than Gears of War 2 at the 2008 Game Developers Conference.