Barbie takes a dare that she and Billy can stay in a haunted house for an hour to prove that they aren't chicken. They bring Marmaduke with them for protection.
They go inside and the kids go upstairs while Marmaduke shakes off the ash that he got on himself. A ghost of Captain Clum appears and starts to go up to scare the kids and Marmaduke stops him. The ghost tries to scare Marmaduke but Marmaduke does get scared of it. The ghost then leads him outside by changing himself into a giant bone. Marmaduke busts down the front door and gets back inside. The ghost tries to scare him off a couple more times and ends up changing himself into a giant cat and getting chased by Marmaduke.
The ghost leaves to haunt another place and Billy and Barbie win their dare and they never saw the ghost.