The episode begins at the 38th Annual Springfield Media Awards, and is narrated by Sideshow Mel. Inside the hall, the Entertainer of the Year Award goes to Lisa Simpson. Mel then explains how Lisa became an entertainer. At Krusty the Clown's 4,000th episode, Krusty decides to hire brand-new "Krustkateers", children who used to star alongside Krusty in his early episodes. Bart has the best performance of all the children auditioning, but Krusty chooses Nelson Muntz instead. Lisa decides to defend Bart and demands Krusty hire him. However, Krusty decides to hire Lisa as his intern instead. As Krusty's intern, Lisa is frequently bullied by Krusty. Noticing how Krusty degrades Lisa, Mel tells her that Krusty is very conceited, so in order to bear Krusty's rudeness, Lisa must compliment him. Lisa takes Sideshow Mel's advice, and a conceited Krusty finally praises Lisa's assistance.
Meanwhile, Bart and Homer decide to sell all of Krusty's merchandise in Bart's room. Comic Book Guy trades a coin album and a bicentennial quarter for the collection. Bart and Homer start coin collecting. When the two believe they have filled the entire collection book, they discover a secret coin slot for the rare 1917 "Kissing Lincolns" penny.
When Krusty fails to entertain the audience at one of his shows, Lisa attempts to make Krusty look better. After pushing Krusty off the diving board, the entire audience laughs at Krusty and praises Lisa, whose mind is swept with fame and fortune. Krusty is warned by his agent that Lisa's popularity may steal his spotlight. One evening Krusty is running late for a rehearsal, and the program directors offer Lisa the opportunity to fill in. Dressed in a clown outfit she performs Krusty's monologue, then when Krusty finally arrives he finds out the network has hired Lisa to replace him, and have renamed the show "The Lisa Show". Lisa becomes an overnight success, but Sideshow Mel warns Lisa not to overdo her pride. Krusty is relegated to a local late-night talk show.
Bart and Homer head to a coin auction house in an attempt to buy the "Kissing Lincolns" penny, but Mr. Burns buys it instead. Mr. Burns does not willingly give Homer the penny, but unknowingly gives it to Homer as part of change for a nickel.
The main story concludes, and Lisa is shown proudly accepting her award. After the awards show, Mel reveals to Lisa that he had previously won the Entertainer of the Year Award, and that past winners (including himself) had their careers killed because of the award by starring in mediocre TV shows and movies. Lisa realizes that she needs to get out of the business while she still can. She runs back out on stage and calls Krusty up, giving him a chance to be in the spotlight again. The episode ends with Krusty regaining his reputation and his show, where he continues to torture Mel to make people laugh.