Last Comic Standing is a talent show in which a comedian is selected from a group. The winning comedian receives a development contract with the NBC and appearance opportunities on Comedy Central and Bravo. In the early rounds of the competition, talent scouts held open casting calls in various locations around the United States. At each casting call, scouts identified comics to participate in callback auditions in front of live audiences. Scouts then selected comics from each callback, who were invited to participate in a semifinal qualifying round.

During the semifinal rounds, selected comics competed against each other, and a panel of celebrity judges and the show's producers, selected comics to advance to the final qualifying round. This determined which comics would be "in the house." Once "in the house," the comics participated in some type of comedic challenge each week. Past challenges included performing stand-up at a local laundromat, working as a tour guide in Los Angeles, participating in a roast at the Friars Club of Beverly Hills, and performing comedy on a specific subject with little preparation time on a radio show. The winner of each challenge was usually rewarded with immunity from being eliminated from the competition for that week, while the remaining comics were vulnerable to elimination through a "head-to-head" standup challenge.

Each comic selected one other comic whom they believed they could defeat in a head-to-head challenge. The comics were sent off individually to a secluded booth, and selected another comic in the group using the phrase "I know I'm funnier than _____." The comic who received the most nominations participated in that evening's head-to-head competition, and selected their opponent from any of the comics who had challenged them.

The head-to-head competition occurs in front of a live studio audience. The winning comic remains "in the house" for at least one more television week, and the losing comic is eliminated from the competition. When only five comics remain, the format changed again. All remaining comics perform for a large theatre audience as before, but now the decision-making power shifted from the studio audience to the television audience. Viewers cast their votes for their favorite comic by phoning a specific number, by voting online at the network's website, or both. The comic who received the lowest number of votes each week was eliminated from the competition, until there was one "Last Comic Standing".