A couple is walking down a sidewalk and spots a large, stray dog; thinking that Madame Foster's home is an animal shelter, they bring the dog to Foster's. Frankie informs the couple that the dog can't stay there (because Mr. Herriman is deathly afraid of them, being a rabbit), even though Eduardo wants to keep it. Later, while Ed is taking out the trash, he finds a lost puppy and decides to keep him. Eduardo brings the secret puppy to bed and gives it a stuffed bunny.
The next morning the puppy is missing, and Eduardo is in a panic, trying to find it before anyone else does. At breakfast, the possible presence of a dog in the house is first introduced to everyone when everyone's feet are being licked. Eduardo ducks under the table, trying to recover the puppy but fails to. He ends up trying to prove there isn't a dog there by embarrassing himself and licking Wilt's sneaker.
Later, Eduardo also takes the blame for the mess in the hallway the puppy made which grosses everyone out and embarrasses Ed even more and also the fur the puppy shed, by ripping out is own fur, hurting himself in the process. Unfortunately, these attempts to rid Mr. Herriman's fear of there being a dog in the house fail, and the rabbit dons some ad hoc armor which consists of a pillow to protect his stomach and a pot for a helmet.
Frankie also tries to quell Mr. Herriman's fear, suggesting he repeat there isn't a dog in the house presently to himself. Well, the puppy walked in some ketchup and started tracking it all of the house, and Mr. Herriman followed it to his office where he found the head of the stuffed bunny Eduardo gave the puppy.
Meanwhile, Mac comes over after finding a whole litter of puppies that look like the one Eduardo found. Mac, Wilt, Coco, and Eduardo are admiring them all, while Bloo, feeling ignored by Mac, because there were supposed to build a time machine, sulks and names one of the puppies Stupid.
Mr. Herriman organizes an emergency house meeting to show everyone the evidence he's collected about there being a dog in the house, when all of the puppies get lose. This brings on a scene where many of them try to prevent Mr. Herriman from finding the puppies, even though the puppies get really close to the rabbit.
Well, Mr. Herriman finds out, and they puppies are set to be picked up by animal control. Just before the puppies leave, though, Stupid tells Bloo that Bloo's his favorite and that he'll miss Bloo. Bloo changes his attitude and embraces him. As it turns out, all of the puppies are imaginary friends with various special powers and are able to stay.