Plot
After Mystery, Inc. solve their latest mystery and unmask a would-be criminal known as "The Luna Ghost", long-brewing tensions erupt between Fred Jones, who has become a self-obsessed glory hog, Daphne Blake, who is tired of being the damsel in distress, and Velma Dinkley, who resents Fred for always taking credit for her plans. Subsequently, they disband, abandoning a broken-hearted Shaggy Rogers and Scooby-Doo.
Two years later, Mystery Inc. are each separately invited to a horror-themed tropical resort called "Spooky Island", at the behest of its owner Emile Mondavarious, who believes the guests are falling under a demonic curse. While Shaggy and Scooby hope that this will bring the gang back together, Fred, Daphne, and Velma each intend to solve the mystery on their own. At a ritualistic performance given by actor N'Goo Tuana and his henchman, famous luchador Zarkos, N'Goo claims that ancient demons once ruled the island and that the resort has disturbed their sacred ground. Meanwhile, Shaggy falls for a girl named Mary Jane, who is allergic to dogs, distancing himself from Scooby in the process. Scooby encounters the island's demons in the forest and attempts to warn Shaggy, but is not believed.
The gang each end up at the resort's abandoned haunted house ride and decide to cooperate for the time being. As the gang is exploring, the ride is activated, putting the gang in danger. Fred and Velma manage to break into the control room and shut off the ride, where they also discover an educational film about human culture. Meanwhile, Daphne finds a pyramid-shaped artifact called the "Daemon Ritus". Zarkos and his minions arrive, but the gang manages to escape.
Later, at the resort's hotel, the demons launch an attack. Scooby, Shaggy, Daphne, and Mary Jane manage to escape, but Fred and Velma are kidnapped and subsequently possessed. The next day, the damage from the night before has been repaired and the resort guests act as if nothing happened. Scooby and Shaggy find Fred and realize that he has been possessed, along with the rest of the resort guests, leading to a harrowing chase in which Scooby realizes Mary Jane is also possessed. Meanwhile, Zarkos captures Daphne and steals back the Daemon Ritus.
Scooby tries to tell Shaggy about Mary Jane's possession, but they have a falling-out after Shaggy refuses to believe him. Shaggy searches for his friends and discovers the demons' underground base of operations, as well as a vat of protoplasm containing the souls of those possessed by the demons. Shaggy frees the souls of Fred, Daphne, and Velma, who discover that sunlight is fatal to the demons.
A local voodoo priest informs the gang that the demons are planning to sacrifice a pure soul with the Daemon Ritus as part of a ritual known as "The Dark-pocalypse", which will result in them ruling the world for the next 10,000 years. The gang realizes that the pure soul is Scooby's and that Mondavarious invited them in order to use Scooby for the ritual. Fred, Daphne, and Velma put aside their differences and make a plan to save Scooby and the world.
Shaggy infiltrates the ritual, where he and Scooby reconcile. Fred and Velma unmask Mondavarious, revealing that he is actually a robot controlled by Scooby's estranged nephew Scrappy-Doo, who the gang had abandoned years before due to his power-hungry and egomaniacal nature. Using the souls already in the Daemon Ritus, Scrappy transforms into a giant demon monster.
Meanwhile, Daphne fights Zarkos and knocks him into the vat, tipping it over and returning most of the other souls to their bodies. Daphne then reflects sunlight through a disco ball the gang had set up earlier, vanquishing the released demons. Shaggy removes the Daemon Ritus from Scrappy's chest, freeing the rest of the souls and reversing his transformation. During the subsequent celebration, Shaggy and a freed Mary Jane reunite along with Scooby, while Fred and Daphne share a kiss. Shaggy also finds the real Mondavarious, who had been trapped by Scrappy. Scrappy and his henchmen are arrested and Mystery, Inc. reunites.
