Scooby, Scrappy and Shaggy are touring the English countryside in the Mystery Machine, and Scrappy is pumped to see a castle. Scrappy’s wish is soon granted as they appear to be driving in Merlin the Wizard’s neighbourhood.
Inside, Merlin is trying his hardest to remove the infamous Excalibur sword from the stone as whoever does, will be instantly be crowned the ruler of England. Unable to remove it, Merlin consults his black magic book for a magical formula. Reading the formula, all he needs is two dog toenails – one big and one small. Plus the hair of someone tall.
Consulting his crystal ball, Merlin spots the Mystery Machine and puts a hex on it that makes the vehicle float directly to him. Once inside the castle, Scrappy confronts Merlin’s frog Jasper, who ends up swallowing Scrappy whole. Fortunately, Scooby manages to shake Scrappy out of the frog’s tummy.
Scooby grabs Scrappy, and together with Shaggy, all three try to run out of the castle. Unfortunately, Merlin zaps a suit of armour alive, which prevents them from escaping. Scrappy grabs Merlin’s magic ball and uses it as a bowling ball to strike the suite of armour down.
All three of them try to make their escape down a flight of stairs, but Merlin turns the steps into a ramp and sends the gang sliding down into the castle’s dungeon. Scooby is frightened by a skeleton, and while Shaggy is telling Scooby that he has nothing to fear by a bunch of old bones, Merlin zaps the skeleton alive.
Scrappy clobbers the skeleton, and the gang run and hide in a dungeon cell. Before Merlin can capture them, they emerge from the cell dressed as royal tailors.
Giving Merlin a new and stylish look, they hand Merlin a mirror. Merlin is not impressed and he throws his hat at them. The hat turns into a whirlwind and sucks Scooby, Shaggy and Scrappy into its vortex. Now trapped, Scooby and Shaggy are tied to a table so the evil wizard can use them as an ingredient for his spell.
They are saved at the last minute by Scrappy, who has pulled the legendary sword out of the stone, and Merlin tells Scrappy that he is the ruler of the land. With their freedom, Scrappy, Shaggy and Scooby leave the castle in the Mystery Machine, ready to drive off to Scotland to find the Loch Ness Monster.