Krusty, as the Headless Horseman from The Legend of Sleepy Hollow, is holding his laughing head, and hurling it at the camera, which makes the show's title appear on screen in blood. We hear Krusty do his trademark groan. Later, in the couch gag, the family is hung onto nooses, staring blankly.

When Homer goes to Lard Lad Donuts to get a "Colossal Donut", he denounces their advertising when he realizes that the "colossal donuts" aren't very colossal. So, in revenge, he steals the Lard Lad mascot's metal donut. In the midst of a freak storm, Lard Lad and other giant advertising figures come to life to terrorize Springfield. Homer eventually returns the donut, but Lard Lad and his friends simply keep right on destroying. Finally, Lisa goes to an ad agency, and an executive suggests not to look at the monsters. He tries to write a song, but suggests it would actually sound better coming out of Paul Anka, who performs a song with Lisa. The citizens of Springfield do not look at the monsters, who lose their powers and become lifeless.

Bart has a nightmare that Groundskeeper Willie is out to kill him. He is slashed with a rake, and the scratches are still on his body after he wakes up. Many other kids at Springfield Elementary School also say they were terrorized by Willie in their nightmares, and what he did actually affected them. When the students take a test, Martin falls asleep and is killed by Willie. Martin dies in class, and Bart and Lisa tell Marge about the monster. She says that Willie was killed in a furnace explosion in the school's basement on the thirteenth hour of the thirteenth day of the thirteenth month (the school misprinted their calendars"). He burned to death while the parents of the students looked on and did nothing, and that he told the parents he would get his revenge by killing the children in their dreams.

Bart decides that he's going to go to sleep and dream of fighting Willie. Lisa is supposed to stay awake and wake him up if he seems to be in trouble. Bart appears in his dream and attempts to get Willie, who can also transform into other things. Willie turns into a bagpipe spider and is about to kill Bart, when Lisa enters, trying to wake him up. But since she's in the dream, that means she has also fallen asleep. They're about to lose the battle when Maggie appears and uses her pacifier to seal the vent on the spider, causing Willie to explode. Now Bart and Lisa hope they are free of Willie forever, but they were wrong. He does show up again, but just as a normal person with no dream-powers, much to the children's relief.

Patty and Selma visit the Simpsons, driving Bart, Lisa, and even the pets to evade them and consequently leave almost no place for Homer to hide. Desperate to avoid his wife's sisters, he looks behind a bookcase and enters a mysterious new world in which everything is in 3D. Homer explores the peculiar area, and finds that he is trapped within (only his voice can be heard to Marge and the others). He seeks help from them, but their attempts to rescue him are fruitless.

After a cone hits Homer, he throws it into the floor and accidentally pierces the fabric of the space-time continuum, causing it to collapse into a wormhole threatening to pull Homer and the rest of the dimension into a black hole. Bart takes command and enters the third dimension to save Homer. Bart is unable to help, however, and the universe collapses on itself. Bart is pulled back into the house and Marge is sad that her husband is gone; Reverend Lovejoy attempts to appease her by saying he has gone to "a better place". Homer is sent into the real world, landing in a dumpster in a live-action Sherman Oaks, Los Angeles. He walks around, frightened as people stare at him, but then is pleased to find an erotic cake store.