The Dance Lounge is the second floor of the Night Club, where penguins can play a variety of arcade games, or just sit around. There are two arcade machines on opposite sides of the room, on which penguins can play either Astro Barrier or Thin Ice.
There are three clothed tables in the center of the room, each decorated with different objects. There's an assortment of greenery around the room, as well as two television sets supplemented by speaker systems.
- During the Medieval Party 2017, the Dance Lounge was turned into a king's dining room. There was a balcony to see to Ski Hill, a huge table with food, a map, etc, a portrait of a jester and a knight, and an area for the jester.
- During the Music Jam 2017, the Dance Lounge became a room for music video production.
- At The Fair 2017, the room was darkened, and only lit by neon lights.
- For the Halloween Party 2017, the room was darkened, and dressed with bunting, and other spooky decorations. One jack-o-lantern was placed on each of the two arcade machines, both representing the specific game of the machine it was placed on.
- A screen was also attached to the wall, screening the second Night of the Living Sled, along with an advertisement for the film being placed near the staircase downstairs.
- During the Christmas Party 2017, the room became a toy workshop.
- From here, players could enter Santa's Sled during the party.
- The working conveyor belt in the room would turn scraps into gifts before putting them in the "Toys" bag.
- A minor bug during the Halloween Party 2017 caused the second TV screen to occasionally display the subtitles in a different language (Portuguese, perhaps?) than the subtitles on the larger screen.