The Mystery Gang heads to Camp Little Moose, an old summer camp once run by Fred, to enjoy a peaceful vacation while serving as camp counselors for the season. However, upon their arrival, they discover the camp is eerily deserted, with only the head counselor Burt and Ranger John Knudsen present. As they explore, they learn about a terrifying legend from the camp’s past—the Woodsman, a once-cruel counselor who suffered severe brain trauma after a prank gone wrong, turning him into a violent spirit that haunts the woods.
Soon after, three children—Luke, Trudy, and Deacon—arrive, and despite Burt's initial inclination to close the camp for safety, Fred convinces him to keep it open to investigate the strange occurrences. It isn't long before the gang and the children are besieged by the Woodsman, who appears to be a spectral force rather than just a myth.
The next day, the group takes a break at Big Moose Lake, home to the affluent and competitive Camp Big Moose. While enjoying their time, they are unexpectedly attacked by another legendary creature—the Fishman. This monster is said to have evolved from a lonely child who spent so much time swimming in the lake that he became part fish. During the chaos, Scooby-Doo uncovers a mysterious structure beneath the lake’s surface, hinting at deeper secrets hidden beneath the water.
Later, Jessica, the head counselor at Camp Big Moose, raises concerns about missing equipment, suggesting a prank or something more sinister is afoot. The gang uses a tracking device to trace the equipment's location to Shadow Canyon, where Stephen Root explains the legend of the Spectre, a vengeful spirit said to haunt the canyon after a hiker's ghost. The group splits up: while some explore the mysterious underwater town beneath Big Moose Lake, others venture into Shadow Canyon to investigate the strange signals.
Their investigations reveal that the underwater town, Moose Creek, was once a thriving mining community that was abandoned after a dam was built, which flooded the area. The gang discovers that a hidden treasure belonging to a notorious gangster, Ricky LaRue, is believed to be buried there. According to legend, the treasure's location will be revealed when the sun hits the town steeple on the Summer Solstice—which is soon to occur. They deduce that
Babyface Boretti, an escaped convict and the gangster’s former accomplice, plans to use dynamite to blow up the dam and flood the area, unearthing the treasure and causing chaos at the camp.
As the dam explodes, the gang races to rescue Burt, Luke, and Trudy, who are still at the camp and trying to escape the destruction. They realize that the Woodsman had been working in cahoots with Boretti, intent on unleashing destruction to reach the treasure. The Woodsman is revealed to be Boretti, disguised as the legends suggest, and he is determined to find the treasure at any cost.
In the climactic moments, the gang uncovers that the Fishman and Spectre were also disguises—portrayed by Stephen Root—posing as the spooky legends to cover Boretti and Knudsen’s plans. The real Ranger Knudsen joins the gang, exposing himself as an ally, and the gang successfully captures Boretti, who attempts to escape with the treasure.
The story concludes with Burt and Jessica merging the two camps into Camp Little Big Moose at Moose Creek, transforming it into a combined camp that promises new adventures. Meanwhile, the Mystery Gang remains as camp counselors to serve the rest of the summer season.
In a post-credits scene, it’s revealed that the Spectre still haunts the camp, suggesting it may not have been just a disguise after all and leaving the mystery open-ended for future adventures.
