Is it possible to run a game from an external hard drive?

It is possible as I run Games from an external 160GB Harddrive on my desktop.

I believe that for the most part, it is possible to run a game from an external hard drive.

The only difference between an external hard drive, and an internal hard drive, is the way they're connected, and sometimes even those are the same! Most external hard drives are connected either through USB or eSATA.

Now, even though it is possible, it isn't something that I would really recommend doing. At least for USB, the read/write speeds for accessing the files on the hard drive are going to be slower. Video games do a lot of read/write, mainly for graphics and such. If the game is more of a powerhorse, then I wouldn't recommend doing it. But if its just something like Peggle, you should be fine doing so.