Mayor Hamilton Hill is giving a speech to the press at the building site for Gotham Towers; a new housing complex that he believes will give the people of Gotham a safe place to live. During his speech, he makes the classic Gotham politician mistake, claiming that "under [his] leadership, no city will be safer or more free of crime than Gotham City." The approaching sirens belie those words, and before the end of his speech, a car pursued by a police vehicle bursts into the building site and wrecks havoc. The thugs burst out of the car and start firing tommy guns at the police, but then Batman swoops in to end the fight. As the police lead the subdued thugs away, Summer Gleeson swoops in to ask the mayor about "safety in the city." He tries to save face by claiming this was an isolated incident, and blames Batman and criminals like the Joker for causing all the problems in Gotham.
This turns out to be another mistake, because Joker has been watching the interview. Mayor Hill continues to dig his grave by promising to "run all of these costumed freaks out of town and make all of Gotham City as safe as my mansion." Joker decides to find out exactly how safe Hill's mansion is.
The next day, Hill is preparing his mansion for his son's birthday party. A lot of important people have been invited, so he wants everything to be perfect. His son, Jodan, is less than enthusiastic about the party, and is content to be shut up in his room practicing magic tricks. When Hill tells him to come down and join the party, Jordan argues that it's his dad's party. After all, the only people he's invited are prominent members of Gotham society and their kids have tagged along. Jordan doesn't know any of the guests, and doesn't think he'll have any fun. Hill has a surprise for his son, though. In addition to the important guests, he's invited a clown: the exuberant Jekko the Magnificent.
While Jekko entices Jordan with his magic tricks, Bruce Wayne arrives to the party. Mayor Hill tries to get Jordan to come over and meet with Bruce, but Jordan has finally had enough. "It's always about what you want!" he yells at his dad and runs off. Jekko decides to go ahead with his last trick, and pulls out a massive "candle." It doesn't take a genius to figure out that Jekko is really the Joker, and the "candle" is really a stick of dynamite, but no one's ever accused the average Gothamite of being brilliant. Joker heads over to the cake and lights his candle, and then pushes the cake over towards all the grownups. Jekko makes his escape, passing Bruce and Hill at the door. As he leaves, he can't help but use his trademark laugh, which Bruce recognizes. He instantly knows that something's up, and makes his way out to the party. He spots the dynamite stick, marked with Joker's face, and makes his way through the crowd (clumsily) and knocks the cake into the swimming pool. Everyone is real disappointed until the pool water blows up into the air.
The police quickly respond to the scene, and Commissioner Gordon locates the real Jekko the Clown, tied up down the road. Jekko tells Hill that some maniac had attacked him, stealing his van and costume. Bruce suddenly realizes that Jordan is missing. Sure enough, Jordan has stowed away on Jekko's van. Joker arrives at his amusement park hideout and celebrates his victory while listening to the Summer's news report. During the report, Summer mentions that Hill has declined to confirm that Jordan is missing. Joker is stunner by this, because that means – sure enough, Jordan comes out of hiding, and Joker realizes that he's got a problem to deal with.
Meanwhile, back at the mansion, Bruce and the others are watching footage of the birthday party. Hill promises that things will be different if Jordan is returned to him. At that moment, on the video "Jekko" tells Jordan that he learned all his tricks from the Great Prosciutto. Batman has his first clue!
Back at the park, Joker is teaching Jordan how to swallow a sword. His lesson is interrupted when Joker's security system sounds an alert. As he scans his cameras, he notices Batman skulking through the park. Joker gets Jordan to help him "play a little trick on Batman." Jordan lures Batman into the park's funhouse, where Joker ambushes him with his razor-tipped playing cards. Batman easily evades the attack and chases after Joker, who flees to higher ground and then tosses his ace card at Batman. This card detonates into a cloud of knockout gas, and Batman falls to the ground. Joker uses a fortune telling machine to decide how to kill off Batman.
When Batman awakens, he is hanging upside down in Houdini's water-tank trap. Batman rips loose of his straightjacket and tries to bust free, but there is no trick to opening the case. Jordan tries to break Batman out with a fire axe, but Joker snags the weapon from him. Jordan responds by spritzing Joker with a seltzer bottle, finally reliving him from his Jekko disguise. While Joker chases Jordan out into the park, Batman finally breaks free of the tank.
Jordan finds a hiding spot on the Twin Terrors roller coaster. As Joker heads inside the ride, Batman activates all the power in the park. Joker finds Jordan and starts the ride with Jordan stuck in the car. As the cars start up the first hill, Joker tosses exploding baby dolls at Batman. While Joker manages to blow up the second roller coaster car, Batman launches himself onto Joker's car. Joker tackles Batman and tries to squirt his acidic flower in Batman's face, but Batman kicks him off the back of the car. Joker plummets into the lake below. It's not over yet, though, because the car is heading towards a gap in the track. Batman convinces Jordan to trust him so that he can swing to freedom. The roller coaster car jumps the track and demolishes the amusement park.
Batman returns Jordan to his home, and Mayor Hill begins the work to rebuild his relationship with his son.