A wild creature called the Hodag of Horror steals precious jewellery from the people of Crystal Cove. At the same time, Fred's real parents have suddenly appeared, along with a dog whom Scooby has taken a fancy to.

A zombie ghoul attacks the cemetery, with the prime suspect being the grave digger, Evallo von Meanskrieg, who's a deadringer. But only Velma sees the connection, and has to expose the hoax by herself. Meanwhile, Fred and Shaggy fall in love with three beautiful young immigrants to the silent jealousy of Daphne.