Easter is fast approaching, and Fat Albert and the Cosby Kids find their efforts to do something nice for Mudfoot thwarted by a practical joke gone horribly awry.

The Cosby Kids are rehearsing for a Christmas pageant at their junkyard clubhouse, which Tyrone, the mean old junkyard owner, is fixin' to tear down. That's when Marshall & his parents show up. With their car broken down, Marshall's mom is about to have a baby and his dad, without health insurance, inspires the gang to invite them in the clubhouse for shelter. Tyrone agrees to let them stay until the baby is born, in exchange for Fat Albert working for him as a sidewalk Santa. "Ho-ho-ho's" in Fat Albert fashion ensue. After the old hobo, Mudfoot, gives Tyrone a lecture about how he's been grumpy at the world ever since his wife died, the junkyard owner has a change of heart and promises to keep the gang's clubhouse in tact.

It's Halloween for Fat Albert and the Junkyard Gang, and everyone's all set for trick-or-treating. While searching for costumes a store clerk kicks them out, leaving the gang to comes up with their own home-made costumes. Then they are off to the movies to scare old Searchlight Johnson, then more hijinks with Mudfoot Brown, and old lady Bickwell. As you can probably guess, things don't go too well and they learn their lessons... Searchlight catches them up to no good in the theatre and throws them out. Mudfoot Brown eats most of their candy, and old lady Bickwell turns out to have the best Halloween treats in town.