Daphne Blake retells the Mystery Inc.'s event with Benny, Leo, Johnny and Rae in a television at the time they were at a haunted castle while being pursued by a green troll-like creature After a fortunate accident by Scooby-Doo, he is caught and discovered to be a counterfeiter. After years of unmasking phony ghosts, the Mystery Inc. gang have gone their separate ways, all assuming that since their mysteries have all been people in costumes, more mysteries can't bring anything new. Daphne and Fred go off to start a successful investigative TV series (Coast to Coast with Daphne Blake), Velma opens a mystery bookstore, and Scooby and Shaggy bounce from job to job, including work as customs officers at an airport, from which they are rather quickly fired after eating all the confiscated foodstuffs saved for the flights. However, when Fred decides that the next episode of Daphne's show should be about tracking down real ghosts, he reassembles the gang, invites the leaders and brings them all to Louisiana.
After encountering many "men in masks", the gang arrives in New Orleans, and are invited by a cook named Lena to visit Moonscar Island, the home of her employer. The island, Lena claims, is said to be haunted by the ghost of a pirate named Morgan Moonscar. When she leaves, Fred comments that she is very cute, to Daphne's annoyance. Although the gang and the leaders are skeptical (except for Shaggy and Scooby, of course), they decide to go along with Lena and visit the island. On the way, Velma informs the gang that Moonscar Island is the home of many unexplained disappearances over the years.
The gang arrives on the island and meets Lena's employer, Simone Lenoir, a beautiful Cajun woman, who explains about the haunting of Morgan Moonscar. En route to the island, the gang also meet Jacques, who runs the ferry from the island to the mainland and Beau and "Sunshine", Simone's gardeners, whom Daphne says is cute (to Fred's disapproval) even though she was irritated with Fred for saying almost the same thing about Lena. Benny becomes fluttered by "Sunshine"'s sudden kindness, but Rae later becomes irritated by her with her teasing. They also meet Snakebite Scruggs, a grungy fisherman (after Big Mona, a catfish) and his hunting, Mojo. Johnny, Scooby and Shaggy are chased by Mojo, and end up falling inside a big hole. While trying to get out they accidentally pull down some of the wall they were trying to climb, revealing a skeletal arm. A mysterious green fog-like energy appears and envelopes the skeleton, causing it to fall out of earth. The bones are then joint up to mount a complete human skeleton, which then continues to transform, grisly gaining skin and hair, until it finally transforms into the zombie of Morgan Moonscar himself. While trying to escape, Scooby and Shaggy bump into Beau, who's a bit suspicious. Daphne, Fred, Velma, Lena and Simone go from the bushes. Scooby and Shaggy bring them to the hole, but it's empty. While the sun sets, Simone invites the gang to her house to stay for a night. As the gang is dressing up for dinner, Shaggy sees the ghost of a Confederate colonel in the mirror, to which Simone explains that the plantation area of the island was a temporary headquarters for a Confederate regiment in the American Civil War period. Big Mona comes to Louis to bring news that Benny and his friends are at Moonscar Island, thus coming to the rescue.
Later that night, Scooby and Shaggy eat in the Mystery Machine, to keep Scooby from chasing Simone's cats. However, they burn their mouths by eating too much spice. Both of them rush to the lake to refresh themselves, when suddenly the sinister green energetic aura which previously reanimated Morgan Moonscar's corpse reappears and deposits itself into the soil of the lake, causing a big army of zombies to reanimate and emerge from the lake to attack them. Due to Shaggy's bad driving skills, the Mystery Machine sloughs in a muddy bank, forcing him and Scooby to flee on foot. Fred, Daphne and Velma go to look for them, but bump into Beau. They split up. Fred and Daphne argue a little, both disliking the other's love interest and trying to prove they are the suspect. Fred and Daphne find Scooby and Shaggy (Daphne accidentally uses martial arts on them as she felt something was on her back) trying to escape as they discover an unconscious zombie (this zombie passed out due to Daphne's martial skill). Fred thinks this is just "another man in mask", but rips the zombie's head off. It turns out that the island is home to real zombies. Benny, Leo, Johnny, Rae, "Sunshine", Scooby, Shaggy, Fred, Beau and Daphne separate. Fred and Daphne hear Lena's screams and run to save her. Fred trips down on a stone and the camera falls into a quicksand pond, which it sinks into. Fred and Daphne reunite with Velma and Beau (Velma started to grow suspicious on Beau because "he is never nearby when something strange happens around" and decided to accompany him wherever he goes). Louis later finds the leaders and meets "Sunshine" now reveals her real name Sunlight. Scooby and Shaggy discover wax-made dolls with the looks of Fred, Velma and Daphne and play with them, causing the real versions to do the same (in a classic voodoo doll trick), but the play is interrupted by bats and the zombies. Fred, Daphne, Velma and Beau come back to Simone's mansion and discover a secret passage under the main staircase. They find Lena and she tells them that the zombies kidnapped Simone and dragged her through the passage. Daphne, Fred, Velma, Lena and Beau find a secret chamber. Velma sees the footprints heading into the chamber are Simone's (meaning she wasn't "dragged", she walked down that tunnel) and starts to question Lena about Simone's "kidnapping".
Simone appears, and she and Lena use voodoo dolls to trap the gang in the chamber. They transform into werecats ("cat creatures") with the intention of draining the gang's life force to preserve their immortality. The zombies - including Morgan Moonscar - were their many murdered victims (pirates, spice traders, Confedrate soldiers, gangsters, and tourists alike) whose bodies reanimate every harvest moon to alert visitors of the villains.
Velma questions their knowing about Moonscar's treasure, and Simone reveals that back in the 18th century, she and Lena were part of a group of settlers who wanted to make the island their home. One night, during the harvest moon, while the settlers were celebrating their successful harvest, Morgan Moonscar and his pirates came ashore and chased the settlers, except for Lena and Simone, into the bayou where they were eaten alive by alligators. A vengeful Lena and Simone begged their cat god to curse the pirates, and after the wish was granted, they killed the pirates by draining their lifeforces. The wish, however, came with a price: Lena and Simone were cursed as well, as while they originally intended to just avenge their friends and family, the curse caused them to become werecats permanently, and eventually turned them evil, requiring that they drain life forces to survive. Consequently, Lena lured more people to the island, and they granted Jacques immortality in order to gain a ferry driver to bring them even more life force.
The leaders, Louis, Sunlight, Scooby and Shaggy tumble into the cave, interrupting the ceremony and buying the gang time, which Velma uses to untie herself. She quickly creates voodoo dolls of Lena and Simone to interrupt their draining Scooby and Shaggy. When it seemed they were cornered, the werecats' life force expires, making their bodies disintegrate and breaking the curse, freeing the zombies' souls to rest in peace. After the zombies' souls disappear, the ghost of the Confederate colonel thanks Scooby and the others for helping lift the curse. Beau is revealed to be an undercover officer sent to investigate the disappearances on the island (to Velma's fascination); Fred and Daphne become a couple again and Daphne offers Beau a chance to guest-star on her show to discuss the adventure, and he accepts offscreen. Benny offers Louis an idea of doing a hot sauce business using the Moonscar Island peppers, which Louis immediately takes action. Rae calls truce with Sunlight, but that doesn't mean Sunlight doesn't stop teasing her and thus calling her "kitty-cat". Upon departing, before Scooby can enjoy a chili pepper sandwich, he notices Simone's cats, now homeless, coming towards him with their eyes glowing sinisterly, and the story ends with Scooby getting confused.
- This is the first adventure not featuring the El Arca Big Six, however they do appear in one of the parts. It is later explained that they are back at the studio in Manhattan spending time with the Cubs.
- This adventure debuts Sunlight. She disguises under the name "Sunshine".
- Scooby-Doo and the gang met the Fantasy Adventure Team at Benny, Leo and Johnny's Adventures of Epic Mickey.
- Louis appears in this adventure, revealing that he is an old friend of Benny.