A headless ghost walks through an old abandoned house. Meanwhile, the gang is on it's way to a rock festival and Shaggy and Scooby are playing in the back, when they stop after seeing a sign. The sign is of no use and they figure out they are lost. They see a man named Shanks walking with a lantern and they tell him they are looking for Interstate Five. He says there is a long way and a short way. He says to go the long way because there is a haunted house on the short way. He tells them about a headless ghost. He warns them not to go the short way because anyone who had met the headless ghoul hadn't lived to tell about it. Shanks then disappears.
They get to the fork in the road and they can't decide which way to go. They go the short route because they are low on gas, but their enguine overheats right in front of the haunted mansion. Scooby and Shaggy go to get water out of a well when a ghost floats out of the well. They run back to the gang and the van and tell them what happened. They all check it out, but the ghost is gone and no one believes Shaggy and Scooby. They also realize there is no bucket, so that means no water. They see a light in the mansion and decide to go in so they can get a bucket of water.
They knock on the door and it opens, but no one is there. The door slams shut and they see a candle. They see the candle levitate and they run as it chases them. They go into a spooky room and see a painting of a man named Jefferson Stillwall. He is pointing at something. When they look back at him, the head goes missing. When Shaggy and Scooby show the others, the head is back. The gang hears a knocking and they go after it. Meanwhile, the headless specter goes into a room and picks up a chest as he laughs.
They hear more pounding and find the sounds coming from behind a door. They see the same chest that the specter was holding earlier and Scooby agrees to open it. It's a wooden dummy head of Jefferson Stillwall and it frightens Scooby, but Scooby Snacks fix that problem. Scooby points out footprints and Shaggy doesn't want to go, but agrees to. The gang follows the footprints, but the tracks split up so the gang must split up.
Shaggy, Scooby, and Velma hear knocking in a room so they go in and it is pitch dark. Shaggy and Velma comment on how each other's hands feel cold and clammy. When they get out of the dark room, they see that the headless specter was between them in the room. They run as the ghoul chases them through the house. They use a spinning wheel as a bicycle to get away from the ghost and crash out of the window of the house, onto an electrical line and into the well. They are in the well, when Scooby trips a secret passage in the well's wall. They all go into the tunnel as Fred and Daphne find a book with a strange riddle in it. They hear knocking again and find a tunnel. They decide to investigate and Daphne trips knocking them down into the passageway. It is an old fruit cellar. They meet up with Shaggy, Velma, and Scooby. Scooby and Shaggy find rubber balloons in jars. Velma also points out the helium gas tank.
They figure out that the ghost was a helium balloon with a sheet over it was what Scooby and Shaggy saw. Fred hands Velma the book with the riddle in it. The riddle, 'marching men in single file, Stillwall shows the way,' must mean a column that the Stillwall painting was pointing to. They all go to the painting and see that he seems to be pointing at an old greenhouse, but no columns. Shaggy and Scooby don't see anything in the greenhouse, until they run into headless specter. They run back into the cellar and start blowing up balloons to get away from the ghost.
They are all float up out of the well on balloons and the rest of the gang sees them. Scooby's balloon pops, making him run into Shaggy, who runs into the ghost. They crash in the chicken coop and the ghost's head pops out of the suit. The man is the owner of the mansion and used the specter to scare people away so he could hunt for the treasure that was rightly his. He didn't want anyone to steal it. They hear the thumping noises again in the attic and Fred and Shaggy decide to investigate. They see a man hacking away at a beam in the attic. The man chases Fred and Shaggy out of the house, but Velma and Daphne hold a rope up tripping the man. It is Mr. Shanks, Stillwall's neighbor. Scooby finds a carpet bag with money in it a column.
The gang is eating pizza as they wrap up the loose ends. The picture had been pointing at the right column, but someone had moved the picture. The gang is back on the road to the festival and Scooby is playing with some drums and laughs when he gets his hands tied up.