The transparency of a tile in Chip's Challenge determines whether anything underneath it shows through and how it behaves in response to interactions with objects. Keys, boots, monsters, and Chip are transparent, while all other tiles are not. Transparency not only affects how the tile is drawn in Chip's Challenge and in level editors, but also how it behaves.
When a level editor draws a tile pair consisting of an upper-layer tile and a lower-layer tile, in play the game will check to see if the upper-layer tile is transparent. If it is not, only the upper-layer tile will be drawn on the grid, and it will ignore the lower-layer tile. If the upper-layer tile is transparent, Chip's Challenge will first draw the lower-layer tile and then draw the overlay version of the upper-layer tile, determined by combining the OR and AND versions of the tiles in the tileset.
The tile buried underneath a key, boot or monster determines whether Chip can step on it, but the transparent tile itself determines whether monsters and blocks can step over it; the only exception is the clone machine which has the same effect on either layer. The summation of the rules below is that the lower layer is erased when an object steps on two tiles on the same square and the upper layer does not become floor. If Chip stepped on a square with two computer chips on it, he would collect the top chip and not erase the bottom chip, as changes to the upper layer are processed first.
This behavior is due to the limitation that a Chip's Challenge level can only contain two layers, the result being that there is nowhere for the lower tile to go to if the upper layer remains intact when the object enters the square. Although this appears in CCLP2's One-Block Sokoban and Yet Another Puzzle, no CCLP3 level uses this type of transparency, since all combinations of transparent tiles are either illegal in Lynx or are inconsequential to gameplay.
- Whenever a monster steps on any legal tile, anything on the lower layer will be completely erased. Since a monster cannot collect keys, and keys are the only transparent tiles monsters can pass aside from Chip, when a monster passes over a key, it can erase tiles Chip cannot.
- When monsters try to touch Chip's square, Chip's Challenge first checks if the monster can legally or safely move onto this square. When there is a destructive obstacle fatal to this monster underneath Chip, the monster will die. If the move is illegal, the monster treats the square as any other obstacle.
- As a block cannot collect items, anything on the lower layer will be erased by it unless the upper layer is floor, water or bombs. When the square is floor or a bomb, the revealed tile will be underneath the block or under the floor left behind, and the dirt will hide the tile when the square is water.
- When blocks land on Chip's square, he will only be safe if he is on a clone machine; bombs, water, and even acting walls underneath Chip will not save him, as they would if a monster hit him. Since Chip can never get on top of a clone machine while playing, this scenario can only occur if the level starts as such.
- When Chip steps onto any legal tile, unconnected traps and exits on the lower layer will take effect on Chip immediately. When any other tile is revealed under Chip, unless he pushed a block off it, the effect of the tile underneath it will not activate until Chip returns to it. This allows him to safely collect, for example, a blue key on top of water, and he is treated as if he is swimming until he leaves the tile such that any monster other than the glider will drown as normal.
- If the upper layer is not Chip-acting dirt, which is all items, the lock, blue wall, socket and dirt, then Chip will erase the lower layer. This can force Chip to step on the tile again if he wishes to activate a button under such a tile or to reactivate a brown button for the same reason.
- Chip cannot step on another Chip tile, but he can reveal another Chip tile on the lower layer.
- When a monster lands on a tile composed of Chip above a bomb, a variation of the Non-Existence Glitch occurs.
- If a tile is hidden under water and a glider or Chip swims over it, the tile underneath is similarly erased. The only way to access this tile is to make dirt and step on it; as usual, only unconnected traps and exits take effect immediately.
- When Chip steps on a space with two transparent tiles in MS (with another Chip excluded), the infamous Transparency Glitch forces Chip's Challenge to crash in one of various ways. This happens because the nature of the tiles changes only when Chip steps on the combination (collecting the item, being killed, or both), while a monster cannot collect an item and will only erase the lower layer underneath a key (this time including Chip) or kill Chip on the upper layer.
A notable exception to the transparency rule is the clone machine. When the clone machine is placed under any tile, it will be rendered an acting wall to everything. In Chip's Challenge 1, the only intended tiles to be placed on top of clone machines were monsters and clone blocks, and clone machine mechanics prevented Chip from dying when he hits a monster cloner or from moving the block when he hits a clone block. (Earlier versions of Tile World Lynx mode change clone blocks without clone machines into normal blocks.)