From Monkey Island wiki
GrimE (Grim Engine) is an adventure-game engine using the open-source scripting language LUA. It was created for Grim Fandango by Bret Mogilefsky at LucasArts. An enhanced version of GrimE was used to power Escape from Monkey Island.
GrimE was the successor to SCUMM, preserving some of that engine's features. Like SCUMM it is based around characters and objects which interact with each other, on top of pre-rendered backgrounds. The major difference between GrimE and SCUMM is that the engine which deals with character rendering and movement in GrimE is a true 3D engine; characters are collections of 3D-rendered polygons and movement is controlled in full 3D by the keyboard. There are other, less obvious differences; the way actions are scripted, for example, is completely different, and allows for much more sophisticated movements and actions by non-player characters.