Warner Bros Interactive Entertainment will launch the Sesame Street characters onto Kinect for Xbox 360 from the autumn.
Sesame Street: Once Upon a Monster will invite fans to join Cookie Monster, Elmo and other characters as they explore a living storybook.
Guided by the 'social and emotional' curriculum set out by Sesame Workshop, activities will promote lessons about making friends, co-operation and recognising and labelling emotions.
"Combining Double Fine Productions' talent for making highly creative games and the beloved Sesame Street brand, the game mixes original gameplay with a memorable learning experience," said Samantha Ryan, SVP, production and development, Warner Bros Interactive Entertainment.
Rosemarie Truglio, VP of education and research at Sesame Workshop, added: "We are excited to collaborate in the development of this game where families can play together, be physically active and parents have the opportunity to foster the social and emotional development of their children."