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Penguins appear in some levels on Ice Island. They will usually jump up from icy water and slide on the ice before re-entering the water. If Croc touches one, he will be hurt. In the level Licence To Chill, they star as part of a Mini-Game known as the Popping Game in which Croc must press buttons corresponding to the pool that a penguin jumps out of in order to 'pop' them. If he pops enough, he will get a Gobbo out of it.
In the Game Boy Color game, they also appear in popping games, but also leap out of the water vertically, attacking Croc