While watching The Springfield Squares, Bart and Homer see an advertisement for "Gabbo". Everyone is talking about it and wants to know exactly what the Gabbo blitz is all about.
Finally, the day comes when the world finally gets to see Gabbo. It turns out that Gabbo is a ventriloquist's dummy, partnered with Arthur Crandall, the ventriloquist. It is revealed that "The Gabbo Show" is on every afternoon at 4, at the same time as "The Krusty the Clown Show".
Krusty retains his confidence that Gabbo is no threat, but in a short time, Krusty finds that he is hurting in the ratings. Gabbo continues to dominate while Krusty is struggling. We learn that Krusty has lost Itchy and Scratchy to Gabbo. But never fear, he obtained Eastern Europe's favorite duo: Worker and Parasite. The cartoon is completely incomprehensible. Finally, Krusty finds himself in an empty studio. Gabbo has won.
After leaving his co-stars, Krusty goes to seek Johnny Carson for advice. Unfortunately, Krusty hasn't been saving money in the event of such of a desperate time. He blows his last $10 at the horse track, and loses.
Bart hopes to do some sabotage towards Gabbo to get Krusty back. At the KBBL studio, Bart happens to notice Gabbo badmouthing the kids of Springfield during a commercial break. He loses the cameraman and tapes Gabbo unwittingly cursing out the kids. It makes news; however it seems to make no difference, Gabbo is still #1.
Bart and Lisa find Krusty begging for food and they take him back to his dirty apartment. Seeing a long list of famous celebrities on his wall, Bart and Lisa think that Krusty can be back on his feet with their help. Krusty gives them his address book.
Bart and Lisa are able to enlist a long line of celebrities with the only hold out being Elizabeth Taylor. They return to Krusty's apartment finding him to have become a giant blob. The family allows Krusty to stay at their house while Krusty loses his excess fat.
Once he does, Sideshow Mel refuses to aid Krusty, so he hires his reviled half-brother Luke Perry. Luke's ability to upstage Krusty gets him in hot water, but Krusty agrees to find something he can do... maybe shoot him out of a cannon?
The Krusty Comeback Special starts, and while Krusty is singing "Send in the Clowns", Sideshow Mel returns to aid him.
The show, with Johnny Carson, Bette Midler, Hugh Hefner and the Red Hot Chili Peppers as performers, is a smashing success. Celebrating the success of the show, everyone is at Moe's Tavern. Krusty is grateful to Bart and Lisa for having revitalized his career.
Bart issues a toast to Krusty, the world's greatest entertainer... except maybe Johnny Carson.