Rocky, Bullwinkle and Karen Sympathy are recovering a stolen ruby from Boris and Natasha. They are successful in this, but then they are diverted by Gidney and Cloyd the two moon men who inform them that they discovered a ghost lady who had returned from the crossing over world and she was her way to Pottsylvania. Boris and Natasha didn't know especially as the ghost lady was headed to their homes, but this news shocks them so they must connect with Fearless Leader immediately.
In Pottsylvania, Fearless Leader gets a call from Boris and Natasha (during a meeting with Dibs Plutzker who is also a ghost) and is warned that there's a ghost lady coming to Pottsylvania. Dibs tells Fearless Leader that he knew that ghost lady once but Fearless Leader tells Boris and Natasha off for telling fibs and hangs up on them. But he is soon proved wrong when the ghost lady appears - Carrigan Crittenden, Dibs's former boss once when they got into a fight. Carrigan fills Fearless Leader in about Whipstaff Manor when she and Dibs were trying to get the treasure only to have trouble with crazy ghosts scaring them away until the Harvey family arrived to live there. Carrigan has also tells Fearless Leader when she fell off the cliff, she died and turned into a ghost and flew into the castle to take the treasure only for Harvey's daughter and her little ghost friend to foil her. She has unfinished business but she was tricked into telling them no so she crossed over. Fearless Leader has an idea and decides to make Carrigan alive again.
Back in America, Karen tells Rocky and Bullwinkle that she needed to find the ghost lady with help from Gidney and Cloyd, while they have to find some other ghosts because she is not the only ghost around. Rocky and Bullwinkle agree, so Karen leaves with Gidney and Cloyd. After they're gone, Rocky and Bullwinkle have to find some other ghosts around to make sure that ghost lady has some adversaries on her level.
Dr. James Harvey and his daughter, Kat are taking a vacation on a cruise ship and they farewell their ghost friends, Fatso, Stinkie and Stretch (the Ghostly Trio) and their nephew, Casper the Friendly Ghost. They promise Dr. Harvey to not let anyone in unless someone else is feeling lonely. After they're gone, the Ghostly Trio can do what they want but Casper is feeling sad.
En route to the cruise ship, Dr. Harvey and Kat meet Karen along with Gidney and Cloyd. Gidney and Cloyd have to turn invisible so no one can see them. Knowing that Dr. Harvey was a ghost expert, Karen explains the situation as she understands it. The decision is made to get the cruise ship to visit Pottsylvania, but the Harveys have no idea how. Karen tells them she'll have that in hand.
Rocky and Bullwinkle are driving down the road while Boris and Natasha are watching them and following them from above in a zeppelin. Every time they used their weapons they always missed and shake the air ship. Rocky and Bullwinkle drive around to keep away from Boris and Natasha and hide in the car wash while the spies argue over who should use the binoculars while keeping the air ship steady. The result was that they couldn't find Rocky and Bullwinkle anywhere so they have to keep looking further down the road. After Boris and Natasha fly away, Rocky and Bullwinkle get out of the car wash and drive on another road until they see arrive at a castle - Whipstaff Manor.
Rocky and Bullwinkle enter the castle and look around, realising that they've stumbled into a haunted castle. In the kitchen, Casper is serving his uncles a meal, when he hears someone inside without knocking on the door. He flies through walls and see a talking moose and a flying squirrel. Casper flies up to them and try to greet them, but Rocky and Bullwinkle stop and turn around and see a ghost, causing them to yell and run. The Ghostly Trio hear that so typically they take advantange and start scaring them further until Casper tells them to stop. He had recognised Rocky and Bullwinkle - the famous moose and squirrel that America has been talking about. Stretch reminds his nephew they promised Dr. Harvey to not let anyone in unless someone else is feeling lonely. Realising that these ghost weren't as scary as they thought, Rocky tells them that he and Bullwinkle are feeling lonely as well, so Casper takes Rocky and Bullwinkle up to their guest bedroom.
Meanwhile at Pottsylvania, Fearless Leader reveals that he has invented a machine called Lazarus (a different version of the one at Whipstaff Manor). It can bring a ghost back to life. Carrigan is delighted and flies into the machine and Dibs turns it on. The machine restores her to life. But Fearless Leader warns her that she is both (dead and alive), and if she jumps off any solid surface she is standing on she'll turn back into a ghost. But when she lands on the ground she's alive again. Carrigan immediately sees many positive possibilities to that idea, but Dibs prefers her as alive the best.
Boris and Natasha finally realize while searching for Rocky and Bullwinkle everywhere and couldn't find them that they must have backtracked. They have their moose and squirrel detective device and locate them at Whipstaff Manor.
The next morning, Rocky and Bullwinkle wake up thinking they'd just had a dream. But they're still at Whipstaff Manor, and they came downstairs and into the kitchen and saw Casper cooking breakfast for them. Casper tells Rocky and Bullwinkle that he cooked his uncles breakfast, lunch and dinner every day because he is the best cook and without him the Ghostly Trio would go hungry. The trio have also come down for breakfast and order Casper to give them their meals. Rocky didn't realize that when those ghosts eat their meals, they fall right out of their bodies, so he asks Bullwinkle to talk to ghosts for a while, while Rocky can be excused from the table to look around the castle. He and Bullwinkle decide to keep company with Casper and the Ghostly Trio.
Rocky explored the castle, but when he opened one of the bedroom doors he sees names on top of the pillows: Stretch, Fatso and Stinkie. Casper arrives and warns Rocky not to go into his uncles bedroom again because Casper goes in there, he'll be grounded for afterlife. Rocky gets it, and asks Casper about yesterday when he saved him and Bullwinkle. Casper tells him the reason why is because Casper is a friendly ghost and he showed Rocky that he had been making friends all these years in the past. He then tells him and Bullwinkle that he became friendly with everyone but everybody is scared of ghosts and ran away.
Suddenly they hear somebody coming in - Boris and Natasha had arrived and Rocky and Bullwinkle told Casper and the Ghostly Trio that they were trying to get away from them. The Ghostly Trio can scare them away while Casper can hide Rocky and Bullwinkle in the closet.
The spies start searching the castle looking for their targets, but everywhere they look they find themselves scared by any member of the Ghostly Trio. In the bathroom, the kitchen, no matter where they went a ghost was there scaring them. The Trio are having ball as Boris hits his head and squashes his hat numerous times, while Natasha's hair goes from straight to frazzled. A final triple scare has the spies running through the front door and away. Free to emerge from the closet, Rocky and Bullwinkle thank them and Casper for their help.
Embarrassed, Boris and Natasha contact Fearless Leader to notify him of the development not intending to mention ghosts. But when Fearless Leader advises that they told the truth about the ghost lady, Boris drums up the courage to tell him about the three crazy ghosts as well as the inability to locate Rocky and Bullwinkle. When they hear about Carrigan they are stunned and delighted at the same time.
On the cruise ship meanwhile, Gidney and Cloyd disguise themselves as a person in the form of an international police officer in order to tell the captain that they need to sail directly to Pottsylvania. But they didn't need to disguise themselves as the captain was in fact Captain Peter "Wrong Way" Peachfuzz who was happy to help. Gidney and Cloyd are delighted and go to inform Karen, Kat and Dr Harvey. They had met up with two more ghosts on the cruise, Spooky and his girlfriend Pearl who were on a date.
Next instant, Carrigan flies in and kidnaps Dr Harvey, being careful not to touch the deck to become human. Despite the pleas of Kat and Karen, Carrigan disappears with the Doctor. This development alarms everyone and Karen takes charge and tells Gidney and Cloyd to go and tell Rocky and Bullwinkle what has happened. Spooky volunteers to go with them while Pearl stays on the ship.
Back at Whipstaff Manor, Casper tells Rocky and Bullwinkle about his history. The story stops when Gidney, Cloyd and Spooky arrive. Hearing what has happened doesn't much to Rocky and Bullwinkle but it means plenty to Casper and the Ghostly Trio who thought Carrigan had crossed over. It meant that everyone had to get to Pottsylvania to rescue Dr Harvey and stop whatever Carrigan was up to.
In Pottsylvania, Fearless Leader, Boris, Natasha, Dibs and Carrigan tie Dr. Harvey to a chair. Dr Harvey wants to know what this is all about and Carrigan still wants the treasure that she was denied from Whipstaff Manor and she is angry she was tricked into crossing over and wants revenge. That meant ensuring that Casper, the Ghostly Trio, Kat and Dr Harvey crossed over after the Harveys were made into ghosts. The Doctor is mystified how she got back but Carrigan refused to tell him how.
The cruise ship arrives in Pottsylvania, and Casper and the Ghostly Trio arrive with Rocky, Bullwinkle, Spooky, Gidney and Cloyd. The ship's arrival doesn't go unnoticed by Fearless Leader and the gang realize that in time and split up into three groups and hide quickly. This doesn't work for Peachfuzz, Gidney, Cloyd, Spooky and Pearl who are caught. Rocky, Casper, Kat and Karen manage to make their way to a place where they can see Dr Harvey tied up - with Boris, Natasha, Dibs and Carrigan in the room. Kat and Casper are shocked as Carrigan is standing on the floor in human form. They then see that Peachfuzz, Gidney, Cloyd, Spooky and Pearl have bee caught and are wondering where Bullwinkle and the Ghostly Trio have gone.
They don't have to wait long. The Ghostly Trio have planned a massive scare party and they launch it scaring the daylights out of Fearless Leader, Boris and Natasha and even Carrigan and Dibs can't resist the fear although Carrigan doesn't jump in air. She forgets to do it in sheer terror. Spooky loves it and joins in. Bullwinkle takes advantage of the massive distraction and releases Dr Harvey (and gets tangled himself in the process).
Kept at bay, Fearless Leader can't stop Dr Harvey from telling everyone else about the Lazarus machine, explaining Carrigan's human form. Dibs - shaking with fear - reveals that if the machine is destroyed it's effects will disappear making Carrigan a ghost permanently again. The gang set to wreck the machine. Carrigan goes to stop them but is forced back by a particularly gruesome scare from Fatso.
The machine is wrecked and Carrigan becomes a ghost. Outraged, she launches a scare raid of her own chasing Kat, Karen, Rocky and Bullwinkle. Casper tried to intervene and Carrigan renders him unconscious. The Ghostly Trio are furious at this. "Who's going to cook for us now?" Fatso roared. Boris and Natasha thought aren't happy with Carrigan chasing Rocky and Bullwinkle and they wanted them for themselves.
This creates a diversion and it allows the Trio to fight back against Carrigan. Three on one, Carrigan can't cope and flies away squealing "I'll be back!" As she leaves, Stretch yells out "Not at Whipstaff Manor you won't, babe!" Dibs also disappears.
Fearless Leader is furious and starts to pick up the pieces of the Lazarus machine. At a prompt from Rocky, the Ghostly Trio launch a triple scare and Fearless Leader, Boris and Natasha are out the door in a flash. Rocky has found some dynamite and after putting the sticks in the wreckage of the machine he lights the fuse and everyone gets out. The building is wrecked by the explosion.
Later, Casper thanks Rocky, Bullwinkle and Karen for helping Kat while Dr Harvey was kidnapped. Everyone boards the cruise ship and head back to America, where everyone goes their separate ways - the Harveys, Casper and the Ghostly Trio return to the Manor with Spooky and Pearl, while Rocky, Bullwinkle, Karen, Peachfuzz, Gidney and Cloyd return to Frostbite Falls.
Back at Frostbite Falls, Rocky and Bullwinkle put a picture of themselves and their new friend, Casper in a scrapbook and they'll hope to see Casper someday again soon. Then they look at the star of constellations and it's shaped like Casper the Friendly Ghost and the Ghostly Trios.