The film begins with Mystery Inc. investigating the mystery of the Pterodactyl Ghost. They set up a trap to finally capture the ghost, but things quickly go awry when the ghost kidnaps Daphne Blake. A chase ensues around a warehouse, which culminates in Shaggy Rogers and Scooby-Doo accidentally knocking the ghost out. The Pterodactyl Ghost is unmasked to be Johnathan Jacobo, and he is arrested. However, constant in fighting within the group causes them to split up, much to Scooby and Shaggy's sadness.
One year later, Fred Jones has gone onto become something of a celebrity, while Daphne has become a martial artist, Velma Dinkley work for NASA, while Shaggy and Scooby bounce around between jobs, and still long to see Mystery Inc. get back together. One day, each of them receive a mysterious invitation to Spooky Island, a world famous theme park.
The group are reunited at the airport (although Fred, Daphne and Velma are none too pleased to see each other again) and fly out to Spooky Island. After landing, they meet Emile Mondavarious, the park's owner, who explains to them that he thinks the island is haunted by a ghostly masked luchador. He also thinks that the tourists are being cursed.
They next meet N'Goo Tuana, a witch doctor, who explains that the theme park was built on an ancient burial ground, which angered the spirits of the dead and allowed demons to emerge on the island. He also warns them about the legend of Zarkos, the luchador who's spirit is said to inhabit the island.
The gang visit the island's abandoned castle and come across a mysterious artifact called the Daemon Ritus. Soon enough, they encounter the ghost of Zarkos himself, who chases them out of the castle.
They then return to the hotel, where Velma and Shaggy get drunk at the bar and begin to bond over the good old days. One of the less fondly remembered things they bring up is Scrappy-Doo, Scooby's arrogant relation who briefly joined Mystery Inc., but tried to proclaim himself leader of the gang and then urinated on Daphne, which led to him being kicked out. Shaggy and Velma then begin to develop possible feelings for one another. Before anything can come of it, a gang of demons burst into the hotel and begin to terrorize the guests. Fred, Velma and Mondavarious are among those dragged away.
The following morning, Scooby, Shaggy and Daphne are the only ones left. They are suddenly attacked by Fred and Velma as well as other tourists, who have now become zombies, and are chased through the jungle. Daphne is captured by Zarkos, leaving Scooby and Shaggy alone.
The two search the island for clues as to how they can save their friends, encountering one of the demons in the ransacked hotel. They defeat it when the open the window blinds, revealing that the demons cannot stand sunlight. The two leave the hotel as the zombies arrive and continue trekking through the jungle. The two get into a fierce argument and split up; unbeknownst to Shaggy, Scooby then falls down a hole.
Shaggy discovers a well filled with the souls of those who have become zombies, including Fred, Daphne and Velma, but is only able to free the trio, allowing them to return to their bodies. However, Fred and Daphne accidentally swap bodies.
The group stumble onto the beach and encounter N'Goo, who informs them that if the demon leader absorbs a pure soul through the Daemon Ritus, then the demons will rule the Earth for the next ten thousand years. The group realise that Scooby is the pure soul, and believe the Mondavarious is the leader, having summoned the gang to the island in order to extract Scooby's soul. He created the Zarkos mystery as a cover story and also as a means to do away with anyone else who interfered with his plans. The gang finally put their differences aside to work together and rescue Scooby.
They intrude upon the ritual during which Scooby is to be sacrificed, assisted by N'Goo, and a battle ensues between Mystery Inc. and the demons. Mondavarious is cornered, but reveals that isn't the true demon leader. Suddenly, the real mastermind reveals themselves; Scrappy-Doo. Scrappy explains that after he was kicked out of Mystery Inc., he carefully plotted his revenge, and now the time has come. Attatching the Daemon Ritus to his chest, he mutates into a ravenous beast and chases the gang around the underground cave.
Mondavrious opens a portal to Hell, through which the demon army will arrive. Scrappy thanks Mondavarious for his assistance and then devours him. The gang pull together and manage to pull the Daemon Ritus from Scrappy's chest, releasing all of the captured souls. In the mayhem, Fred and Daphne are returned to their normal bodies. N'Goo then attacks the portal, causing it to suck all of the demons back into Hell. The defeated demons drag Scrappy into Hell with them, and the portal closes, saving the world. Zarkos is revealed to have been a wrestler turned mindless zombie, and once his soul is returned, he is freed of the villain's control.
The press arrive and Mystery Inc. are hailed as heroes, and the gang decides to get back together and continue solving mysteries, much to Scooby and Shaggy's delight.
Samuel L. Jackson - Scooby-Doo (Voice)
Jay Baruchel - Norville "Shaggy" Rogers
Chris Zylka - Frederick "Fred" Jones Jr.
Emma Stone - Daphne Blake
Ellen Page - Velma Dinkley
Paul Giamatti - Emile Mondavarious
Arnold Vosloo - N'Goo Tuana
Charlie Day - Scrappy-Doo (Voice)
Kane Hodder - Zarkos