The day before Halloween, the Simpson family completely decorates their house, calling it "Everscream Terrors". Homer stored the plastic skeletons too close to the furnace, and he decides to take the remains to Grampa's home and buy something new at the Halloween pop-up store. On their way to the store, Lisa and Bart see a sign advertising the upcoming Krustyland Halloween Horror Night, and share their excitement for it. At the Halloween shop, Apu gets angry at three lazy employees who are sleeping on their jobs, telling them to go back to work. While Homer is looking for a decoration to replace the skeletons, one of the workers gives Homer a deal where if he buys one "Señor Skeleton", he will give Homer a set of four of them for free. Homer accepts the deal and tells Apu about it, who promptly fires the workers. The three then promise revenge on Homer.
Later, Homer takes the children to the Halloween Horror Night. Although the Horror Night is not real, Lisa gets scared at the zombies and the park is closed. At school, Lisa's trauma makes her scared from even the simplest Halloween figures such as paper zombies and bats. She then hides inside a locker only to be rescued later by Marge. Back home, Marge realizes Lisa's problem and tells Homer they should shut down Everscream Terrors making both Homer and Bart upset. In order to reconcile with Bart, Marge takes him and Maggie to the most famous Halloween block party at a cul-de-sac in Springfield, leaving Lisa and Homer alone. Homer tries to bond with Lisa offering to do a puzzle with her. At the same time, the three workers that Homer inadvertently got fired have come for their revenge, and begin to stalk Homer and Lisa.
Marge arrives at the block party with Bart and Maggie, but are told by the security guard the party is for residents only after visitors wrecked last year's party. She then unsuccessfully tries to bribe the security guard with a coupon for zip-lining, but the security states that taking the coupon would make him worth as much as the fold up chair he sat on. In disappointment as the car turns around the cul-de-sac, Bart watches the children of the neighborhood enjoy the block party, with activities including kangaroo rides and an alien who will say whatever name it is told.
Back at 742 Evergreen Terrace, Homer locks up the house to protect them from the three men; however, they are already inside the house. He tries to take Lisa to the Flanders' house, but she runs back inside to get Tailee, a fur tail from Lisa's early childhood that brought her comfort. Homer rushes to save her, only for them to wind up face-to-face with the home invaders. Homer and Lisa run up the stairs and hide in the attic, and the invaders are unable to find them. Halloween has not been much better for Marge, Bart, and Maggie. It is late out and all the children are asleep. The adults of Springfield come out in their mostly suggestive costumes and a musical number about adult Halloween follows. Marge decides to take Bart and Maggie back home. At the Simpsons' house, Homer is able to calm down Lisa and they decide to use their various holiday decorations to signal for help, but they accidentally activate the Señor Skeletons, giving away their hiding location to the three men. Homer climbs onto the roof to light up the 4th of July fireworks, but the strong wind extinguishes the matches. Lisa then remembers that Tailee is made of polyester and will burn easily, so Lisa decides to sacrifice Tailee and light the fireworks to attract people's attention. This plan is a success, and the whole neighborhood wakes up. The home invaders are then arrested by the police almost immediately and Homer builds Everscream Terrace back so the whole town can enjoy it as Lenny and Carl arrive dressed as Kang and Kodos.
During the credits, Maggie finds the half-burnt Tailee which magically restores itself to the tune of John Carpenter's Halloween.