Some consider this game to be a return to form, as it abandons the linear progression of Leisure Suit Larry Goes Looking for Love (in Several Wrong Places) in favor of the dating sim aspects of the original title. The plot follows series protagonist Larry Laffer, fresh from an abrupt divorce, as he combs through a tropical resort looking for love.
The game takes place on Nontoonyt Island, the tropical setting from the previous game which has since been transformed into a resort. Like the city setting of Leisure Suit Larry in the Land of the Lounge Lizards, the island has several areas and is fully-explorable at the game's start. The controls feature a mouse-based interface and a text parser for directing the Larry's actions.
Littered throughout the resort are Larry's potential mates; whenever the player interacts with these women, they are featured in a close-up portrait, once again echoing earlier games in the series. The basic structure of the game involves Larry presenting each woman with gifts, although none of these items require money to obtain, unlike in the original Leisure Suit Larry.
Leisure Suit Larry III features a second playable character, the titular "Passionate Patti", whom the player briefly assumes control over. Patty's portion of the game is much the same as Larry's, including multiple 'death' scenes and a detailed character portrait of her love interest, a male stripper. However, the Patti sequences are more reminiscent of traditional adventure games, requiring players to navigate through a maze, as well as collect items for use in later puzzles.
The story begins five years after the events of Leisure Suit Larry Goes Looking for Love (in Several Wrong Places).. Following Larry's defeat over Dr. Nonookie, the tropical island of Nontoonyt has reverted to a resort reminiscent of Honolulu, Hawaii. Larry has settled into a high-paying job and lives in a luxurious house with his wife, Kalalua (the daughter of the tribal chief from the previous game). After years of marital bliss, Larry's union comes to an abrupt end when Kalalua dumps him for another woman. As Larry's current boss is Kalalua's father — now a development mogul — he soon finds himself out of a job as well. With this news, Larry retreats into a phone booth (a nod to Superman) and swaps his aloha shirt for his signature white suit, firmly announcing his return to the swinger lifestyle.
The female characters include Tawni, a topless sunbather who is more interested in souvenirs than dating Larry; Cherri Tart, a showgirl who performs at the casino; Suzi Cheatem, an attorney willing to finalize Larry's divorce proceedings; Bambi, an aerobics instructor; and Passionate Patti, a jazz pianist in the hotel (the character appeared in the previous game under the name "Polyester Patty").
Following a misunderstanding, Larry becomes lost in the uncharted "Bamboo Forest", require Patti to navigate the hostile terrain (usually by removing parts of her clothes) to save him. The final act of the game sees Larry and Patty get captured by lesbian cannibals. In an example of breaking the fourth wall, the pair end up at Sierra studios, where they are transported to various Sierra games such as Police Quest and Space Quest II, which appear as 'movie sets'. The game culminates with Larry being offered a job at Sierra, where he will chronicle his adventures into a series of aptly-titled computer games.
With Leisure Suit Larry III, Sierra decided to return to the adult-oriented themes, which were almost absent from Leisure Suit Larry Goes Looking for Love (In Several Wrong Places). The artistic style of the game's characters (particularly Larry) are more cartoony and exaggerated than in the previous game, which opted for a realistic approach. The instruction manual which was packaged with the game resembles a tourist manual, with several "advertisements" which function as codes for bypassing Sierra's copy protection.
As was the case with Leisure Suit Larry in the Land of the Lounge Lizards, the game begins with a series of tongue-in-cheek questions to which the authors reasoned only adults would know the answer; As before, however, this process can be skipped by pressing Ctrl-Alt-X. The number of questions answered correctly determines the games "Filth Level", which displays itself on a scale from 1 to 5: The lowest level (Mother Goose) bars players from viewing any of the game's titillating scenes; Alternatively, the highest level (Totally Raunchiest) leaves all instances of nudity intact. Although the game contains several instances of nudity, none of Larry's sexual encounters are shown explicitly. On the higher "Filth" levels, players are also given the option to input an expletive which is repeated throughout the game.
The ending sequence of Leisure Suit Larry III, which involves a rampage through Sierra's offices, includes many self-aware jokes which are prevalent in Sierra games. At its conclusion, Larry interrupts Sierra programmer Roberta Williams as she is "directing" the whale escape scene from Kings Quest IV. Williams herself was featured on the box art of Softporn Adventure, a 1981 Apple II text adventure which served as the basis for the original Leisure Suit Larry title.