When half their audience-one patron-walks out, The Monkees lose their jobs as musicians at a waterfront café, and Micky, Peter and David drown their sorrows in buttermilk in a bar. Then they overhear two rough looking sailors, Harry Hooker and Frank Reynolds, declaring they need strong guys with the ability to use their hands and knowledge of The Seven Seas. Upon hearing this, the guys try to impress the men by showing these abilities with Micky breaking a chair, David juggling and Peter naming the The Seven Seas. Harry suggests The Monkees, but Frank doesn't think they look like sailors until the guys present themselves in sailor uniforms and are hired for $15. Then they're ordered to report to Pier 3 at 6 in the morning. The guys celebrate getting hired, dubbing themselves the fastest-talking, cleverest, shrewdest sailors of the high seas, unaware that Harry and Frank are informing their boss on the phone that they got the dumbest, dullest suckers in the world!
The next morning, The Monkees arrive with Michael onboard a schooner and are soon giving the task of hoisting a mainsail only to wreck it trying to hoist and unfurl it. When they feel seasick due to the ship rocking, Michael takes some seasick pills from Micky on which he gets seasick, and he goes to the galley to rest (where he stays for the remainder of the episode!). Soon the remaining Monkees are called for roll call, but Peter is detained when he's pulled into the air from holding on to the rope as they reattempt to hoist the mainsail. To make matters worse, with The Captain now present, the boys' ignorance during roll call lands them in all in serious trouble. Then Peter is spotted on top of the pole and when he's ordered down, he winds up landing headfirst in a barrel. The The Captain orders the guys to cut their long hair which they refuse (they'll lose their strength) and as punishment for disobeying orders, he orders them to be keelhauled and lashed 10 times for insubordination, plus 10 extra strokes if they laugh. David claims this punishment violates Naval law and when The Captain asks who he is, Frank tells him his name. Upon learning his name is Davy Jones ("Davy Jones?! As in Davy Jones's Locker?!?"), The Captain spares the guys since he's feeling lucky to have David on his ship. He then orders Micky and Peter to swab the deck but promotes David to cabin boy and orders him to the galley.
At the galley, David carries a tray of the captain's lunch to the captain after entering the wrong cabins, first Micky's as Captain Ahab still looking for the great whale Moby Dick, Peter as Giacoma Casanova forcefully seducing a damsel (who slaps him!), and Micky as a groovy trumpet-playing Captain Horatio Hornblower. When he finally enters the Captain's cabin, The Captain quickly orders him out claiming he's in a middle of a conference. there is no one else but The Captain in the cabin to necessitate a conference, a curious David peeks in and sees The Captain talking to his parrot, Horace about two million dollars in gold which convinces David that he's gone "crackers" (English slang for "crazy"). After informing the others what he overheard, they want find out more so they decide to sneak into The Captain's cabin later that night as The Captain sleeps. Then with Peter taping the parrot's beak shut, Micky impersonates the parrot as he grills The Captain about the plan; he angrily reveals about how he was Captain of the Queen Anne for 30 years when they sacked him, and, in revenge, he plans to hijack the ship and strip her of her riches.
The next morning on deck, Micky tries to convince the others it's all a fantasy, until the Captain and crew, now dressed like pirates, unsheathe sabers, hoist The Jolly Roger, and unwrap a cannon! Back in their cabin, the guys try to come up with a plan to stop the crew from hijacking the Queen Anne and decide to incite a mutiny. Peter whispers to each of the crew members and soon Micky makes a speech to the guys before he informs the Captain of a mutiny and orders him to hand over his sword. When the Captain refuses, he orders the men to seize him but they do nothing since Peter only mumbled nonsense in their ears. The Captain grabs Micky while David and Peter try to play innocent, but Frank exposes them as accomplices and The Captain prepares to make them walk the plank.
Soon they're on the planks as the captain declares them guilty of insubordination to a commanding officer, inspiring to mutiny and impersonating a parrot and forces them to walk the plank. Micky and David buy some time by pretending there's a secret interesting the Captain until a clueless Peter gives them away. Then the guys are saved when the execution ceremony is stopped by the arrival of the Queen Anne, and the crew prepare the cannon. Just as they prepare to fire, Micky, Peter and David step in and snatch the cannon away, setting off a wild musical romp to "Daydream Believer," in which they engage captain and crew in mad swordplay and finally catch them in a fishnet. Grateful, Mayberry, the captain of the Queen Anne, thanks the guys for saving his ship, the gold and its passengers, and promotes them to first mates of his schooner as a reward. He then presents their new captain-Horace, the parrot-who immediately begins to bark out orders! Michael recovers from seasickness long enough to join Micky, David and Peter in the closing musical number: the stimulatingly psychedelic "Star Collector."