The game, memorable for its witty humor, was primarily designed by Ron Gilbert, with Tim Schafer and Dave Grossman. The trio would also helm the development of the game's sequel Monkey Island 2: LeChuck's Revenge.
Guybrush meets the Pirate Leaders who set him three challenges to prove himself a pirate: defeat Carla the island's swordmaster in insult swordfighting, steal a statue from the Governor's mansion, and find buried treasure. Along the way he meets several interesting characters, including Stan the used boat salesman, Meathook (a fellow with hooks on both hands), a prisoner named Otis, the three men of low moral fiber and, most significantly, the gorgeous Governor Elaine Marley.
The ghost pirate LeChuck, however, has been in love with Elaine since his living days. While Guybrush is busy, LeChuck's ghost crew abduct her, taking her to Monkey Island. Guybrush gathers a crew (Carla, Meathook, and Otis), buys a boat, and sets out to find the mysterious island and free Elaine.
When Guybrush finally reaches Monkey Island, he explores it and discovers a band of cannibals and a strange hermit named Herman Toothrot. After he helps the cannibals recover a lost voodoo ingredient, they provide him with a recipe that can destroy ghosts. However, when Guybrush goes after LeChuck, one of his crew tells him that LeChuck went to Mêlée Island to marry Elaine.
Guybrush returns to Mêlée and goes to the church to prevent the wedding. When he arrives at the church wedding, he realises that Elaine had her own plan to escape. LeChuck starts beating Guybrush; until the arrival at the ship emporium, where he sprays LeChuck with root beer (the cannibals having previously mentioned that the magic ghost fighting elixir, which is made from a voodoo root, goes well with vanilla ice cream). With LeChuck defeated, Guybrush and Elaine enjoy a romantic moment, watching fireworks.
The game was conceived by Gilbert's interest in pirates. In interviews conducted at the time of the game's release, Gilbert stated the Pirates of the Caribbean theme park ride at Disneyland inspired him to create an explorable world populated by swashbuckling pirates. Later, Gilbert confessed that the true inspiration came from Tim Powers' book On Stranger Tides. After writing an initial story draft and planning an approved budget and schedule, programming began. Schafer and Grossman both programmed the game as well as wrote about two thirds of the game's dialogue.
The team took three months programming a rough, working version of the game, while simultaneously writing and planning. After testing this early version, various tweaks were made, such as removing sections of gameplay and adding new characters or puzzles. Emphasis was put on making the game enjoyable and accessible to all players. The player character cannot die (except if the player encounters a certain easter egg) or trigger a game over and no puzzle ever becomes impossible to solve at any point. Certain objectives are non-linear; for example, Guybrush must defeat a swordmaster, steal a statue, and find buried treasure at the beginning of the game. These three tasks may be accomplished in any order. This was done to allow the player to pursue another puzzle should one become too difficult to solve.
Art for the game was created by Steve Purcell and Mark Ferrari. The game's soundtrack was primarily composed by Michael Land in MIDI format. Another notable contributor was Orson Scott Card, acclaimed author of "Ender's Game", who wrote the insults for the "insult swordfighting" section.
Several months later, the PC version was re-released with VGA graphics; the Amiga version, released shortly after this, used the PC EGA version's 16-color character graphics along with the PC VGA version's room backgrounds (reduced to 32 unique colors per room).
In June 1992, a CD-ROM version of the game was released, featuring vastly improved music as well as graphical verb and inventory icons (as seen in Monkey Island 2). The interface of the original version uses 12 verbs from which the player can select to perform actions, including ones that are rarely and optionally used in the game such as "Turn on" and "Turn off". In the CD version, the interface is changed to use only 9 verbs. In the fall of 1992, the CD-ROM version was ported to the FM Towns.
The release included a Sega CD version. The Sega CD version was noted for having an odd password feature that did not seem to save the various items the character had acquired in the game, but always saved the items needed. The Sega CD version also suffered from long load times, due to the single-speed CD-ROM drive of the system. The fact that the Sega CD could only display 64 on-screen colors at once (compared to the then standard 256 colors on screen of a computer) gave the Sega CD version a slightly washed-out look. The low commercial success of the game on that system prompted LucasArts to cancel plans to release Indiana Jones and the Fate of Atlantis and Monkey Island 2 for the Sega CD. The Monkey Island series would not appear as a console release again until the fourth game in the series, Escape from Monkey Island in 2000.
In July 2006, GameSpot featured a Designer Thread Interview with Monkey Island creator Ron Gilbert, who mentioned the play during the first few moments of the interview. The play was also mentioned by British gaming magazine PLAY and The Baltimore Sun.
The game contains a few references to the LucasArts game Loom. The SCUMM Bar contains a character from LOOM, Cobb, wearing a pirate hat and a button reading "Ask me about LOOM". If Guybrush tries to hold a normal conversation with him, the only thing he says is "Aye". If asked about LOOM, he launches into an enthusiastic sales pitch for the game. The game also includes a seagull from LOOM as well as several references, including the opening scene for the game. Having been launched out of a cannon, one of Guybrush's dialogue options is "I'm Bobbin, are you my mother?", a reference to LOOM's protagonist Bobbin Threadbare. The joke is used again in The Curse of Monkey Island where you talk to a man sitting in a bar, who slumps on the table. It ends up being a skeleton who looks like Manny from Grim Fandango who is wearing a button saying "Ask me about Grim Fandango".
The game also pokes fun at the gaming conventions of game over. Though it is usually not possible to die in The Secret of Monkey Island, Guybrush can at a point in the game fall off a tall mountain. This prompts a dialog box proclaiming, "Oh, no! You've really screwed up this time! Guess you'll have to start over! Hope you saved the game!" and offering the choices "Restore, Restart, or Quit". This is similar to the death scenes of rival company Sierra Entertainment's adventure games of the time; seconds later, however, Guybrush bounces back into view and lands safely on the path. He offers the concise explanation, "Rubber tree.", and the game continues as normal.
However, it's actually possible to die in the first chapter. At one point Guybrush becomes trapped underwater. He is famously able to hold his breath for ten minutes, but after that time he drowns. In CMI, if the player keeps telling Guybrush to go into the ocean, he eventually agrees to do so. Once underwater, he walks into this scene.
The endgame credits also have an entry for "art and animation for disk #23." Many people did not get the joke, and LucasArts tech support received quite a large number of calls for help with the missing disk. The joke was removed from the CD version of the game, resulting with Guybrush simply saying that he won't fit in if he crawls into the stump. It was, however, mentioned in the sequel: Guybrush can call the LucasArts hint line from a phone and ask, "Who thought up that dumb stump joke?", and the annoyed operator answers, "I'm tired of hearing about that damn stump. Do you have any idea how many calls I get a DAY about that?" In CMI, Guybrush briefly sticks his head into an opening found at the backside wall in the Goodsoup family crypt, which leads to the very same tree stump rendered in VGA-style graphics. He is then quickly forced to escape back through the hole as he spots a horde of "stunningly rendered rabid jaguars".
The stump joke is also revisited in the game Grim Fandango where Manny Calavera will repeat the line of "Wow! It's a tunnel that opens onto a system of catacombs!", which is what Guybrush says when he examines the stump. In Tim Schafer's Psychonauts examining a hollow stump causes a similar reply, only this time it really does lead to a system of catacombs.
In LeChuck's Revenge, however, one of the tunnels leading up in the Dinky catacombs at the end of the game leads out of a porthole in the very same alley. The entrance is closed by a cone barricade, seeming to show that the way out is being reconstructed. However, Guybrush would say "psst" while examining the end, suggesting that it was him who hissed in the first place. Also, upon examining the circus poster, Guybrush would still say the same replica. The Alley looks rendered in VGA to meet MI2 graphicas standard, moreover it looks deserted and desolated by vandals, with junk lying everywhere.
The phrase "Circus? I love circus!" returns furthermore in every other part of the game. In CMI, Guybrush says it when he examines a similar poster hung as advertising on the Carnival, while he was transformed into a child by LeChuck. In EMI, Guybrush says the phrase upon examining a termite circus inside the Bait Shoppe on Lucre Island.