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Ghoulies follows a teenager named Cooper Chance who sets out to rescue his girlfriend, Amber, from Ghoulhaven Hall. This mansion is full of supernatural creatures, and Cooper will receive help along the way from the many hired hands that work there.
The game began life as a name before anything else. The developers came up with the name as a title for a game, and then decided to create a game from that title. Early on, before any details of the game were publicised, it was widely considered that Grabbed by the Ghoulies would be the subtitle to the next Conker the Squirrel game, after Conker's Bad Fur Day. This game was initially going to be released on the Nintendo GameCube. After the Microsoft buyout, Rare began the task of porting the game over to the Xbox, along with a couple of minor graphical additions such as adding an Xbox package in the Games Room. Grant Kirkhope, the composer for this game, admits to sneaking in a live guitar solo in the soundtrack. It can be heard in the Ballroom Disco track.
Many Banjo cameos appear in this game because Ghoulies was developed by the same team. This included the goldfish Roysten, an Xbox keep case of Banjo-Tooie, a Banjo-Kazooie case, Captain Blackeye's barnacle remover, and a note on a board that reads: "Collect Ice Key. Collect 4 Eggs. Open secret level." The latter is a reference to Stop 'N' Swop. The end of the game is left open for a sequel, but due to the game's extremely poor sales at retail, a sequel seems unlikely. This game is often refered to being a poor seller in Banjo-Kazooie: Nuts & Bolts.
- Cooper: The hero of the game, Cooper bravely enters Ghoulhaven Hall after his girlfriend Amber is kidnapped by a couple of ghostly Gargoyles.
- Amber: Cooper's girlfriend is a headstrong young lady, but that doesn't mean that she won't get kidnapped!
- Crivens: The mild-mannered butler of Ghoulhaven, Crivens offers Cooper his assistance wherever he can, although there may be more to him than it seems...
- Ma Soupswill: An eccentric chef who has left samples of her stews around the mansion which give Cooper special powers.
- Mr. Ribs: The only friendly Ghouly in the mansion, Mr. Ribs is Ma Soupswill's helpful assistant.
- Fiddlesworth: The groundskeeper of Ghoulhaven, who's afraid to do his job thanks to the resident Ghoulies!
- Babs Buffbrass: A hard-nosed housekeeper who gets furious at all the mess that she has to clean up throughout the Ghoulhaven Hall|mansion]].
- Dr. Krackpot: An insane genius who certainly lives up to his name. He's the Baron's right-hand man and the source of all the Ghoulies.
- Baron von Ghoul: The Baron is partly eccentric, partly evil, and wholly insane! The aristocratic heir to Ghoulhaven, Baron von Ghoul spends his days in his pajamas imagining himself as a pilot.
- The Reaper: An agent of death who roams Ghoulhaven's halls to bring the souls of the undead ghoulies, and anybody who gets in his way, into the afterlife. He appers when you break one of the rules or do not finish within the time limit. He occasionally pretends to play a guitar using his scythe, which sounds like a real electric guitar plugged in to an amplifier.
- Hunchback: A disfigured ogre of a man who Baron von Ghoul has taken in. He's very protective of his (perceived) handsome face.
- Warlock: An elderly practitioner of black magic who resides in Ghoulhaven and likes to hide in cupboards and other assorted tight spaces.
- The Captain: The leader of the pirate zombies, The Captain was a drunkard who couldn't defend himself in a fight with Cooper and was "done in."
- Roger the Cabin Boy: A tiny imp who was recruited by The Captain to serve in his fleet. He met a violent end when he decided to pester Fiddlesworth.
- Dropper Shocker: A gelatinous blob who drops down from the ceiling to give one of the game's button-mashing Super Scary Shocks.
- Gwenyth: A ghastly green-haired specter who is known to appear outside of windows and frighten passers-by.
- Clive: A giant red serpent who was turned to stone and became part of the decor of Ghoulhaven's Walled Garden.
- Roysten the Goldfish: This long-suffering goldfish gets a bit of peace and quiet in Ghoulhaven Hall's Classroom (also in the game Banjo-Kazooie).
Ghoulies was nominated for the awards of 'Console Family Game of the Year' and 'Outstanding Achievement in Original Music Composition' by the Academy of Interactive Arts & Sciences in 2004. Game Informer lists the game among the worst horror games of all time, although Rare didn't even intend to make Ghoulies to be a survival horror game.
On February 20th, 2009, Rare expressed interest in beginning work on a sequel to the game, Grabbed by the Ghoulies II.