Marge addresses the audience: "Hello everyone. Before lasts years Halloween show, I warned you not to let your children watch. But you did anyway. Hmm. well, this year's episode is even worse; it's scarier and more violent and I think they snuck in some bad language, too. So, please, tuck in your children and... well, if you didn't listen to me the last time, you're not going to now. Enjoy the show."

When Homer, Lisa, Bart come back from Trick-or-Treating, they get a load of candy. Marge tells them not to eat too much or they'll get nightmares. They all scoff at her, but they do have nightmares.

In Lisa's nightmare, Homer buys a cursed monkey's paw that will grant its owner four wishes. While he, Bart and Lisa argue, Marge pleads with them to heed the vendor's warning and not use it at all. Despite this, Maggie is granted the first wish: a new pacifier. Bart wishes for the Simpsons to be rich and famous, but the public soon tires of the family's antics and ubiquity. Horrified by the wasteful wishes, Lisa wishes for world peace, but aliens Kang and Kodos enslave the defenseless Earth. Determined to make a harmless wish, Homer demands a turkey sandwich, but the turkey is dry. With all the wishes used, he gives the paw to his neighbor Ned, who wishes for the aliens to leave and transforms his home into a castle.

Lisa wakes up from her nightmare and begs Bart to keep her company. Bart sleepily complies on one condition: that Lisa give him a candy necklace. Bart is the next person to have a nightmare...

In Bart's nightmare, Springfield lives in fear of Bart's omnipotent powers, including the ability to read minds, magically move objects and turn living things into grotesque forms. When Homer refuses to turn off a football game so Bart can watch The Krusty the Clown Show, Bart transports him to the football stadium in place of the ball for a field goal kick. As Homer creeps into the house trying to surprise him with a blow to the head, Bart transforms Homer into a jack-in-the-box. After Dr. Marvin Monroe says Bart is desperate for attention from his father, Homer spends quality time with his son. Bart restores Homer's human form and they share a warm moment, causing Bart to wake up screaming.

Bart and Lisa wake Homer and Marge and beg them to let them sleep in their bed. As the two crawl into bed, Homer laments that he has to go to work in a few hours and dozes off, becoming the last one in the episode to have a nightmare...

In Homer's nightmare, Homer becomes a grave digger after Mr. Burns fires him for incompetence. While building a giant robotic laborer to replace human workers, Burns searches a graveyard for a human brain to implant in the robot. After mistaking Homer, asleep in an open grave, for a corpse, he removes his brain and places it in the robot. Since Robo-Homer is just as incompetent as the old Homer, Burns declares the experiment a failure. After restoring the brain to Homer's body, Burns kicks the robot, which topples over and crushes him. Homer wakes from the nightmare to find Burns' head grafted on his shoulder. Homer tries to reassure himself that he is only dreaming, but Burns' head insists otherwise.

The episode ends with a joke preview for the next episode of The Simpsons where Lisa wants Homer to go to an all-night spaghetti dinner with her while Mr. Burns, still grafted on Homer's shoulder, wants Homer to come with him to a conference held by Queen Beatrix of the Netherlands. Homer grumbles that he hates having two heads and the credits roll.