It appears on Frozen Over beneath the ice in the lower-right corner. It can be freed by hitting the ice above it with Mortar Monkey shells 30 times. Once released, it jumps out of the ice and lands in a random area near the entrance of the track. In Co-op, it becomes owned by the lowest-numbered active player (i.e. player 1, unless that player quits). The Cave Monkey cannot be used on any other map. It has no upgrades and returns no cash when sold, and if removed from the game (by selling it, removing an Arctic Wind's ice platform, etc), there is no way to get it back without starting a new game.
The Cave Monkey attacks by batting nearby Bloons with its club, which damages and stuns to up to 5 Bloons per hit. It stuns regular Bloons for 1 second and stuns MOABs, BFBs, ZOMGs, and (if visible) DDTs for 0.25 seconds. It can damage and stun any Bloon type, but it cannot detect Camo Bloons on its own. It has a very short range and a middling attack speed, though unlike other item towers, it can be buffed.