The game uses the id Tech 3 engine first used in Quake III Arena. A PlayStation 2 port was in development but was canceled. A sequel, Alice: Madness Returns, was released June 14, 2011. Downloadable ports of the game for PlayStation 3 and Xbox 360 were also made to coincide with the sequel's release as a free download with brand new copies.
Set years after Alice's Adventures in Wonderland and Through the Looking-Glass, the game features an older, more cynical and macabre incarnation of Alice. As of 22 July 2010, American McGee's Alice has sold over 1.5 million copies.
Shortly after Through the Looking-Glass and What Alice Found There, at the age of seven, Alice Liddell witnessed the death of her family in an apparently accidental fire that broke out in her home, which was destroyed in the blaze. Suffering from survivor's guilt, Alice began to lose her grasp on reality and was ultimately sent to Rutledge Asylum, where she is observed and treated by Dr. Heironymous Wilson for her insanity and catatonia. Alice's only possession in Rutledge is a stuffed rabbit. Ten years after Alice was committed to Rutledge, she finds herself sucked back into a Wonderland that has been twisted by her own broken mind. The White Rabbit summons Alice to aid a radically altered Wonderland, which became a twisted version of itself as it came under the horrible rule of the Queen of Hearts. The Cheshire Cat serves as Alice's companion throughout the game, frequently appearing to guide her with cryptic comments.
The game's setting presents a considerably more macabre rendition of Wonderland than seen in Lewis Carroll's original portrayal. Wonderland, being a creation of Alice's mind, has been corrupted by her insanity. Alice's primary objective is to save Wonderland, and in doing so restore her own sanity.
When Alice falls down the hole, she finds herself in the Village of the Doomed. This network of tunnels and caves is the home of the Torch Gnomes, and is patrolled by the Queen of Hearts' card guards. Beyond the subterranean village is the Fortress of Doors, where the main attraction is a school of insane children. Within the school lies an ancient book of recipes for magic potions, as well as the ingredients for one concoction in particular which will be useful to Alice.
Beyond the fortress and across a rough, uncharted landscape lies the Vale of Tears, where Alice's friends Bill McGill and the Mock Turtle reside, along with the Duchess. A giant river runs throughout the gloomy, mist-shrouded landscape, and another aquatic location is accessible through a well inside Bill McGill's house. The well is sealed until the Duchess is slain.
On the other side of the Vale of Tears lies Wonderland Woods, one of the largest regions in the game. The woods are initially filled by ponds, cliffs and jump mushrooms, but much deeper into the woods is a region of rock and magma. This section leads to several new regions including the Cave of the Oracle, the Pale Realm, the Jabberwock's Lair, and the Majestic Maze. The Cave of the Oracle is home to a wise entity that is revealed later to be the Caterpillar.
The Pale Realm makes a transition to the surface of a chessboard, as delving further into this area leads to the White Castle of Looking Glass Land, which is home to life-size chess pieces; the White pieces join Alice in the fight against the Red pieces, a deviation from her normally unhelpful "allies" from earlier portions of the game. Alice is twice transformed into a chess piece herself to pass certain obstacles.
Following this is a distorted version of Rutledge Asylum (where Alice has been incarcerated since her parents' tragic deaths). It is run by Tweedle Dee and Tweedle Dum and also houses the Mad Hatter's laboratory.
The path to the Jabberwock's Lair leads into the Land of Fire and Brimstone, a volcanic region of Wonderland and a reminder of the fire in which her family died. It is here that the terrible Jabberwock—a semi-mechanized servant of the Queen of Hearts and the incarnation of Alice's guilt—resides, in the remains of Alice's old home.
The Majestic Maze ends on the road to Queen of Hearts Land, a region heavily guarded by card guards, boojums, and other members of the Queen of Hearts' personal army.
Queensland is the final province of Wonderland. In it lies the Heart Palace from which the Queen of Hearts commands. Tentacles and other repulsive appendages are seen protruding from every organic wall in this area, and numerous areas even resemble body parts, giving the impression that Alice is travelling through her own body.
The game's characters are generally based on the inhabitants of Lewis Carroll's original novels, but they do not demonstrate the same identities. Many of them are warped incarnations of their conventional selves. The casebook of Q. Wilson (a supplement included with the game and written from the point of view of Alice's doctor) suggests that many of the characters Alice encounters in Wonderland are symbolic of real life people who get through to the catatonic Alice in some way. Other characters within the game are metaphors for Alice's own feelings, and because she is unhappy, they have become twisted. Some people (Cheshire Cat, White Rabbit) help her; others (Mad Hatter, Queen of Hearts) try to cause pain, first by taking away those she loves and then by taking her down with them.