[5] The movie opens with a flashback of a young Vincent Van Ghoul and his partner, Mortifer Quinch, successfully hunting down and sealing the 13th Ghost in the Chest of Demons.

In the present day, Scooby, Shaggy, Daphne, Fred Jones, and Velma Dinkley chase Farmer Morgan through the shopping mall and eventually capture him in Old Timey Toys.

The sheriff chastises the gang for capturing the wrong suspect, and he threatens them that if he ever sees them driving around in the Mystery Machine, he will put them in jail and also reminds them of the new leash law for dogs.

When they arrive, the gang encounters Bernie Alan, who inquired about the crystal ball at their garage sale, and Daphne, Shaggy, Scooby, and Van Ghoul trail him, but then get attacked by the phantom car and it revs its engine to cause an avalanche.

Meanwhile, Fred and Velma search a seemingly abandoned post office in a village, and they meet Flim Flam, now an adult, who tries to sell them his Chest of Demons merchandise and ghost-catching equipment.

He reveals to the gang that Asmodeus is really the demon form of his magically powerful ancestor, Asamad Van Ghoul, and blames the impending doom on himself.

Asmodeus is unmasked as Mortifer, who reveals that he faked his own death by casting an illusion to fool Van Ghoul and he explains that he wanted to sell Flim Flam the Chest for $10 million.

She however fabricated the story to give Van Ghoul closure and debunks the previous 12 Ghosts as hallucinations due to the Himalayan thin air and teases opening the real Chest, but after seeing everyone's fearful faces, she decides not to.

Although this film is a direct follow-up to The 13 Ghosts of Scooby-Doo, it also slightly retcons its events by removing the character of Scrappy-Doo, who had long since fallen into oblivion.