The film opens with Ernest P. Worrell talking nonchalantly to his friend, Vern about a machine that can transform people into anything. Suddenly, something goes wrong and Ernest is sucked into the machine. Dr. Otto, a mysterious villain with a hand growing on top of his head, is plotting to have world domination with his gloom beam which when fired can delete matter, delete memory and has the power to destroy the world but we have the bumbling hero lance to stop him, and the only clue humanity has is a riddle which reads: "When the money is scrambled to the very last cent, riots and hatred soon will commence. When all the world's commerce will be put in a bind, from the evil that lurks where the sun never shines. It is I, Dr. Otto von Schnick -ick-ick-ick, who has played on you this trick-