After catching Abu and Iago stealing bananas, Genie sees two kids, Kaveed and Yani, playing. Genie goes to the kids and tells them a story of Aladdin. The kids like it, but Iago doesn't and decides to tell a story of Aladdin and Abu being trapped by Abis Mal and Haroud and himself being the hero. Kaveed and Yani likes the parrot's story better.
Meanwhile, Abis Mal and Haroud look for the secret stronghold Scorpo the Undefeated. They find an underground lair. Abis Mal tries to get in, but he's too fat and he decides to have some help. Meanwhile, Iago is about to tell another story, but Genie interrupts and tells a story using sock puppets. His story bores the kids and Abu. Meanwhile, Abis Mal and Haroud see Kaveed and Yani and decide to use them to get in the hole of the underground lair. Iago then continues his story while Genie leaves. The angry Abu then interrupts Iago's story and chases the parrot.
Abis Mal and Haroud go to Kaveed and Yani. Abis Mal tells the kids a story of himself being a hero with Aladdin losing the fight. The kids don't seem to like Mal's story. Haroud then tricks them into going on a treasure hunt. The kids decide to do so because they want to be heroes like Aladdin. Meanwhile, Iago and Abu see Abis Mal and Haroud take the kids to the underground lair. The men makes the kids get in the hole. After getting inside, the kids see a golden helm shaped like a scorpion. The men make the kids tie the hat to the rope and after they get the hat, they trap the kids in the hole.
Abu and Iago get in the hole, but Kaveed attacks them because he thought it was a bat. He accidentally breaks Iago's right wing. Iago was about to fly out of the hole to get help, but he is too injured to do so. Abu, Iago, and the kids see a group of Giant Scorpions going after them.
Meanwhile, Abis Mal puts on the hat and uses it to freeze people. He goes to the palace to freeze The Sultan so he can take his place. Meanwhile, the animals and the kids are running from the scorpions. Kaveed then traps the scorpions by closing a gate before they get out. The animals and the kids are now in a long underground tunnel. They climb on pillars and they are now at the marketplace. They then get to Genie and tell him that Abis Mal tricked them into getting the hat. Genie then turns Abu into a camel and everyone goes to the palace to warn Aladdin.
When they get there, they see Abis Mal sitting on Sultan's chair. Genie sends his sock puppets to defeat him, but he freezes them. Genie then goes to him, but he freezes him too. Then, Aladdin shows up to defeat Abis Mal. After defeating him and ruining the hat, everyone unfreezes and the guards capture Mal. Everyone is now at Aladdin's hovel eating desert. Aladdin tells Kaveed and Yani that anybody can be a hero. Iago starts to brag again but Genie swiftly silences him.