After Panty eats Stocking's special pudding, the two get into a fight which jeopardizes a mission against a Wolf and Riding Hood Combo Ghost.

The school is taken over by the demon sisters, Scanty and Kneesocks (the daughters of the mayor), and Panty and Stocking aren't pleased with the new changes they have made. In order to get their revenge, they team up with a Loser Ghost, who leads them to an underground factory where the demon sisters are producing Fake Ghosts. Whilst Brief escapes with the Ghoststone powering the factory, Panty and Stocking fight against the demons sisters.

Panty and Stocking are put on trial for the supposed murder of a friendly Ghost and end up with a monkey as their defendant.

Stocking finds herself falling in love with a rude and flatulent Ghost, much to Panty's surprise.

Panty and Stocking find Garterbelt's diary and learn of his past life as a crime lord before going through several trials set by God.