Randy Cunningham looks for the Skunk Pine in order to restock his smoke bombs. When Randy finds the Skunk Pine, it is stolen by Hannibal McFist to use as a Christmas tree party at McFist Industries. Randy also discovers that Howard is at Hannibal McFist's Christmas party when his father's company was bought by McFist Industries. When Randy infiltrates the Christmas party as a Ninja Santa Claus, he ends up fighting a robotic snowman and an army of robotic Christmas Elves in order to restock his smoke bombs.
After a power outage at school, a Stankified Monster frozen in ice is freed. When Randy de-stanks him, he and Howard learn that his name is Dickie and his monster form was frozen in ice by the Ninja of 1985. When Dickie (voiced by Bobcat Goldthwait) is saddened by this and how he missed his chance with Tawny (voiced by Annie Potts), The Sorcerer takes the opportunity to re-stank him and find out what is the object of his stank.
The Wave Slayer relays are occurring in Norrisville as Randy and Howard accidentally wrecks the Wave Slayer where an accident injures Buttermaker and causes Howard to take his place. The Sorcerer takes the opportunity to Stankify Buttermaker (voiced by Sterling Knight) into an aquatic monster that attacks the opposing team.
Randy must learn a valuable new lesson about respect and humility when after accidentally breaking his sword. He enlists the help of the blind metal shop teacher S. Ward Smith (voiced by John Witherspoon) to get a custom-made sword. Meanwhile, S. Ward Smith's protege Brent believes he was replaced by Howard and the Sorcerer to Stankify Brent (voiced by Jason Earles) into a monster that goes after Howard.
When Randy and Howard are forced to share a lunch table with the outcast group "Der Monster Klub", Randy accidentally tells them how to get people stank'd, and they realize these oddballs are playing a dangerous game that could destroy the whole school even when the Sorcerer gets involved when some of the members get depressed.
Randy must go with Howard to CluckFest under the threat of Bash Johnson. This won't be easy for Randy since he is afraid of chickens. Meanwhile, Hannibal McFist and Willem Viceroy III unleash a fear-pooping robotic rhinoceros called the Rhinosaurus that forces everyone to confront their worst fear as part of their plot to find the Ninja's greatest fear and take advantage of it.
In order to score a limousine ride with soccer super star Pitch Kickham (voiced by Simon Pegg), the Ninja swipes a pair of shorts to help him win a shoot-out competition. When McFist sends an I.D. Bot to find the shorts, Randy's identity is compromised and Howard must take Randy's place in the competition.