After Mystery, Inc. solves the mystery of the Luna Ghost at a toy factory, long-brewing friction between Fred, a self-obsessed glory hog; Daphne, who has become sick of being the one who always gets captured; and Velma, from whom Fred regularly steals credit for her plans, causes the gang to argue and subsequently disband, abandoning a dismayed Scooby and Shaggy and leaving them to care for the gang's van, the Mystery Machine. Two years later, they are all invited to solve a mystery on a horror-themed tropical resort named "Spooky Island" at the behest of owner Emile Mondavarious, who believes the visiting tourists have fallen under a demonic curse.
While Shaggy and Scooby hope this will bring the gang back together, Velma, Fred and Daphne are all intent on solving the mystery on their own. Velma attends a ritualistic performance given by actor N'Goo Tuana and his henchman, famous luchador Zarkos. N'Goo claims ancient demons once ruled the island, but have been plotting revenge ever since they were displaced by the resort. Meanwhile, Shaggy falls for a girl named Mary Jane, distancing himself from Scooby in the process.
The gang are all led separately to the resort's haunted house ride. After some slight arguments between Fred, Daphne, and Velma, they all decide to get along for the time being in order to split up and search for clues. Fred and Velma discover a film that educates inhuman creatures about human culture, while Daphne discovers a pyramid-shaped artifact called the "Daemon Ritus". Later, at the resort's hotel, Fred, Velma and Mondavarious are kidnapped and later possessed by the island's demons. Mary Jane calls the Coast Guard for help, but they don't arrive. The next day, after trying and failing to tell Shaggy that Mary Jane is secretly a demon in disguise, Scooby-Doo goes missing as well; Zarkos steals back the Daemon Ritus from Daphne, who is also captured and possessed.
Shaggy goes in search of his friends underground and finds a vat of protoplasm containing the souls of all those possessed. He finds and frees the souls of Daphne, Fred and Velma, who quickly discovers sunlight destroys the demons. A voodoo priest who lives on the island informs the gang the demons are to perform their "Darpokalypse" Ritual, which will see them rule the world for ten thousand years if a pure soul is sacrificed in the Daemon Ritus. The gang realizes that the pure soul is Scooby-Doo, whom Mondavarious brought to Spooky Island for this very reason. Realizing their mistake, Fred, Daphne, and Velma decide to put aside their differences for good and work together with Shaggy to save Scooby and the world.
The gang infiltrate the ritual, where Mondavarious is foiled in sacrificing Scooby's soul by Shaggy. Mondavarious is then revealed to be a robot controlled by Scooby's estranged nephew Scrappy-Doo, whom the gang abandoned long ago after his increasingly power-hungry and egomaniacal nature got out of control. Absorbing the tourists' souls, Scrappy transforms into a huge monster and tries to kill the gang. Daphne knocks Zarkos into the vat, tipping it over and returning most of the other souls to their bodies, releasing the demons who are then promptly killed by Daphne reflecting sunlight through a skull-shaped disco ball. Shaggy frees the rest of the souls, reversing Scrappy's transformation in the process and finds the real Mondavarious imprisoned, having been captured by Scrappy so he could pose as his double. Scrappy and his henchmen are all arrested and Mystery, Inc. reunites.
Freddie Prinze Jr. as Fred Jones
Sarah Michelle Gellar as Daphne Blake
Matthew Lillard as Norville "Shaggy" Rogers
Linda Cardellini as Velma Dinkley
Rowan Atkinson as Emile Mondavarious / Fake Emile Mondavarious[a]
Miguel A. Nunez Jr. as Voodoo Maestro
Isla Fisher as Mary Jane
Neil Fanning voices the titular character, Scooby-Doo. Scott Innes reprises his role as the voice of Scrappy-Doo and J.P. Manoux voices Scrappy Rex. Sam Greco portrays Zarkos; Steven Grieves portrays N'Goo Tuana; Kristian Schmid portrays Brad; and Michala Banas portrays Carol.
Additionally, Holly Brisley appears as a Training Video Woman. Frank Welker and Jess Harnell voice the creatures. Sugar Ray, Pamela Anderson, and Nicholas Hope appeared in cameo roles.