In the opening scene, the two aliens Kang and Kodos introduce a variety show, with a live audience consisting of aliens. While they tell jokes, canned laughter is played, but the audience appears unamused. The Simpson family sits on the couch, with Homer appearing as the jack-in-the-box from "Treehouse of Horror II", Marge as the witch from "Treehouse of Horror VIII", Bart as the half-fly mutant from "Treehouse of Horror VIII". Maggie is the alien/human mutant from "Treehouse of Horror IX" and Lisa is the victim of an axe murder. Lisa then asks what aliens have to do with Halloween, and Maggie, in Kang's voice, says, "Silence!", and disintegrates her with a ray gun.
In a parody of I Know What You Did Last Summer, on a foggy evening with a full moon, the Simpsons are driving down a coastal road when Marge accidentally smashes into Ned Flanders, killing him. Homer manipulates the body in several escapades, which convinces Maude that Ned died of an accident and that he does not want an autopsy. Shortly after Ned's funeral, the family finds the phrase "I Know What You Did!" written in blood everywhere they go. They are terrorized by a cloaked figure, which drives them out of their house. Again, in the wild, they find Ned. It turns out he lived because he was bitten by a werewolf moments before the accident. Clouds uncover the full moon, Ned changes into a wolf and Marge, Bart, Maggie and Lisa run away. Ned mauls Homer to death while Homer mocks him.
An X-ray machine scanning Halloween candy malfunctions and gives Bart the ability to stretch his body like rubber and Lisa super strength. They become a superhero duo, calling themselves "Stretch Dude and Clobber Girl". Later, Lucy Lawless (dressed as Xena) addresses fans at a science fiction convention. Comic Book Guy, who has styled himself as a villain called "The Collector", kidnaps her using a magnet to attract her metal breast plate. Lawless tries to remove the breastplate but stops after she notices that her horny nerd fans have cameras ready. The Collector takes her to his lair, where he puts her in an aluminized PET film bag for "safekeeping" and imprisons her in a room of other similarly-captured celebrities. Stretch Dude and Clobber Girl then enter the fray in an attempt to free Xena, but they are soon captured as well. The Collector suspends the duo over a vat of Lucite. After feigning interest in the villain, Lawless starts clobbering him. The Collector grabs his limited edition double edged lightsaber from Star Wars: Episode I – The Phantom Menace (which was released a few months before the episode) and ignites the blades, but when Lawless reminds him that he has removed it from its original packaging, he panics and ends up falling into the Lucite. Lawless then flies the children home (Lisa points out that Xena cannot fly, but Lawless reminds her she's not Xena, she's Lucy Lawless).
On December 31, 1999, Dick Clark is celebrating New Year's Rockin' Eve in Springfield. Homer, the Springfield Nuclear Power Plant's Y2K compliance officer, declares that he fixed all the possible Y2K problems at the plant, including the computers. Unfortunately, Homer forgot to fix his own computer, and in the process sends a virus across the world. Chaos ensues, and widespread looting begins. Krusty's malfunctioning pacemaker apparently kills him in front of the family. Bart tearfully mourns his hero, but he perks up, after finding a note. The letter in Krusty's pocket states that a rocket (codenamed Exodus) is being populated with humanity's "best and brightest", and will be launched in order to preserve human civilization on Mars. When they reach the shuttle, Homer fails to bluff his way on board by claiming to be the famous pianist from the film Shine but the armed guard recognizes Lisa as the ship's designated proofreader. Lisa is only able to take one parent with her, and quickly chooses Marge. Homer and Bart find a second, unguarded rocket and board just before it launches. They quickly notice that the spaceliner is filled with such notoriously obnoxious and mediocre celebrities as radio psychologist Dr. Laura, film director Spike Lee, skating champion Tonya Harding, grunge rock singer Courtney Love, politician Ross Perot, actor Tom Arnold, MTV VJ Paulie Shore, and actress/talk show host Rosie O'Donnell. Although the craft is headed directly for the sun, Homer and Bart eject themselves from the spacecraft and die of explosive decompression.