A deceased ska band returns from the grave and hypnotizes partygoers at the local nightclub to dance to their music. The gang is called to solve the mystery before they dance themselves to death.

A polite Englishman in a mask calling himself the Dandy Highwayman kidnaps several women from around Crystal Cove, including Mayor Nettles, Daphne, and Mrs. Blake.

When a monstrous version of the Freak of Crystal Cove begins appearing in Scooby's nightmares, the gang decides to investigate what's going on. They seek the help of the reclusive hypnotist Professor Horatio Kharon (author of the book Velma has been reading), who has also been seeing the Freak within his dreams as well as appearing in Scooby's. After being hypnotized to enter the dream world, the gang is chased by the Monstrous Freak throughout the dimension. They soon discover the evil entity that was trapped with the cursed treasure, and how previous mystery groups and the people affiliated with the treasure have been manipulated by the entity. The being speaking through Nova tells Mystery Incorporated that they must find the Heart of the Jaguar in order to destroy the evil entity sealed within the crystal sarcophagus.

The gang and original Mystery Incorporated stand before the Evil Entity. The Entity grabs Scooby-Doo, and mentions that he must die and be reborn as a vessel to its darkness. Scooby breaks free, but Pericles volunteers to be possessed by the being, to which the Entity agrees. Professor Pericles believes he has gained ultimate power (due to his growth in size and appearance), but the Evil Entity kills Pericles and mutates his body into a squid-like monster. The Entity then assumes control of the Kriegstaffelbots and summons other evil Anunnaki, who proceed to offer the townspeople for the Entity to consume. When Scooby destroys the sarcophagus, the Entity is killed and a vortex sucks everything in, except for the gang, then explodes. The gang find themselves in a new version of Crystal Cove and Earth itself. After some strange encounters, Mystery Incorporated realizes that all the evil ever caused by the Entity has come undone, thereby changing history.