The gang attend the Batty Awards show, and soon it is interrupted by the Shadow Creature. It seems he wants to put an end to the show, but why? Is he really someone wanting to get even, for not getting an award?
At the Batty Awards show a preview of next year's expected horror hit, The Curse of the Shadow Creature is about to be shown. As it begins the Shadow Creature appears on the screen able to move objects in the room, scaring the away audience who are dressed as monsters themselves.
The gang arrives at Brandon Davies' house to attend Batty Awards show, only to see the attenders running away due to the Shadow Creature interrupting the show. While Fred, the girls and Davies find the destroyed film about Shadow Creature, Shaggy and the dogs are attacked by a ghoul who turns out to be Crayton Aimes, an actor who is angry for not getting an award. Fred and the girls are then attacked by Shadow Creature who blows the wind at them. The creature escapes and Fred and the girls see in a piece of a torn newspaper article that the valuable stamps were stolen. In the library, Shaggy and the dogs are attacked by a wolfman who is revealed to be Harrison Stone, one of the founders of the Batty Awards who wanted to set things straight with Davies. Shaggy finds several letters and Velma sees something strange in the letters. In a kitchen, Shaggy and the dogs are chased by the Shadow Creature, but manage to escape. They later bump into a Frankenstein's woman who is revealed to be Doloris Handfield, who wanted Davies to sell his house to put up a shopping center. Fred and the girls find the piece of the film's roll of tape. They watch the film and see Davies leaving the shop on it. Shaggy and the dogs are again chased by the Shadow Creature, but manage to catch him. Velma says that she knew that the letters were strange because they had the stolen stamps. The Shadow Creature is unmasked to be Davies, who has been caught in his movie stealing stamps (that's why he destroyed it), so he could keep his house because he is not rich. Davies is presumably taken to jail.