The gang stops at Wolfs End Lodge for night. They meet chuckling lodge owner, Mr Greenway, who warns them to lock their doors and windows or the Snow Ghost will get them and turn them into ghosts. No sooner does he leave that the Snow Ghost soon shows up outside their windows. They investigate the Snow Ghost's footprints and follow them on snowmobiles. They find the Snow Ghost on a cliff. He flies right over them and into the woods beyond.
The gang finds a cave furnished with Tibetan objects. Ringing a gong, they summon a man named Fu-Lan-Chi, a refugee from the Himalayas. He had encountered the Yeti in Asia, but it had eluded him and tumbled down to its death in a crevasse. But his escape was shortlived, as it followed him into the US to seek its revenge.
The gang don't know what to think of Fu-Lan-Chi's story but they find a new set of tracks covered in sawdust. They follow the sawdust-covered tracks to a deserted sawmill. Scooby, Shaggay and Velma split up to search for clues when Shaggy falls through a trapdoor and the Snow Ghost grabs Velma. Scooby comes just in time to see Velma chained to a log, going down a conveyor belt, which is being cut by a buzzsaw. Scooby pulls her off the conveyor belt and sends both off them down into the lake (log and all). The Snow Ghost sends a log carrying dynamite down towards them, but they escape. Scooby and Velma rendevouz with Freddy and Daphne and all are alarmed when they see Shaggy, pale and moaning like a phantom, but he returns to his normal color when he falls into a pool. Velma theorizes that he was sprayed with a white substance to make him look like a ghost. Fred begins to think that, maybe, the Snow Ghost isn't a phantom either They are interrupted when the Snow Ghost appears and chases them. Fred, Daphne and Velma hide behind a pile of logs. After the Snow Ghost leaves, Daphne discovers a hollow log that is filled with diamonds and jewelry.
The Snow Ghost, gliding upright a few inches above the snow, chases Shaggy and Scooby, who try to escape in a snowmobile. They wind up frozen like popsicles when they run into thin ice. They are chipped out by the rest of the gang, but their accident gives Fred an idea: They'll lure the Snow Ghost to a place where they can quick-freeze him by dumping a tub of water on him. But the Snow Ghost appears behind Scooby, and the water freezes too quickly to be used on him. Scooby and the Ghost fight but are knocked down when Shaggy catapults an enormous snowball at them. They cannonade down the slope, catching up the rest of the gang before crashing into a cliff face. The Snow Ghost is unmasked as Mr. Greenway. He and his partner Mr. Leech used Fu-lan Chi's story of the Snow Ghost as a cover for their smuggling operation; as the Snow Ghost. Greenway "flew" by using transparent plastic skis.