[4] Velma gets a call from Cuthbert Crawley, a lawyer for her family who tells her that she has inherited her great uncle's castle in the Germany-influenced Pennsylvanian town of Transylvania.

When pressured by the gang, Velma reveals the truth about her ancestry – her actual surname is Von Dinkenstein and the baron's ghost is likely her ancestor, Basil, who was said to have created a monster, which inspired Mary Shelley to write her novel, Frankenstein.

As the gang arrive in town, they are introduced to Inspector Krunch, its burgermeister and hunchback Iago, who takes them to the castle, where they meet its housekeeper, Mrs. Vanders.

Strange things begin to happen when the gang goes to a festival being held in the town – Daphne enters a state of vulnerability upon finding that she has suddenly gained some form of morbid obesity after trying on a dirndl at a local clothes shop; Shaggy and Scooby win an eating contest, but upon trying on some handmade lederhosen, they suddenly lose their appetites and develop a sense of courage; and Fred continues to mourn over the Mystery Machine – the former two later being revealed to be caused by the Von Dinkenstein curse.

The gang then lure the burgermeister, Krunch, the gypsy proprietor of the clothes shop Daphne visited and Vanders to the express train.

It is soon revealed that instead of a culprit, there is actually a conspiracy group consisting of past villains seeking revenge on the gang for their previous defeats.

Krunch is revealed to be Crawley, who is actually attorney at law Cuthbert Crawls, who, alongside his colleague Cosgood Creeps, attempted to seize the fortune of Colonel Beauregard Sanders.

Finally, Vanders is revealed to be criminal Mama Mione, who posed as Old Iron Face and that the mask used for the Baron disguise was reused from that persona.