Sarah questions Sonny and Sam about Slappy. The group realizes that Slappy is at fault for everything. The kids capture Slappy and try to dispose of him in a lake, but he escapes. That night, they find an article online about the events that happened in Madison, Delaware and try to contact R. L. Stine (Jack Black) after realizing the book they found was an unpublished Goosebumps manuscript called Haunted Halloween. Stine, now living in a cabin in the woods, hears their message and departs for Wardenclyffe.
Slappy goes to a local drug store and uses his magic to bring Goosebumps costumes and Halloween decorations to life. He also uses a mask to transform an employee named Walter (Chris Parnell) into a hunchbacked ogre. Slappy travels to the Tesla tower, and uses it to amplify his magic. Meanwhile, Sarah, Sonny and Sam retrieve the book from Tommy’s house while all the town’s Halloween decorations come to life. The trio discover that the book can trap the monsters inside. However, the book is stolen and Kathy is kidnapped by the monsters.
The kids’ neighbor Mr. Chu (Ken Jeong), a Goosebumps fan, helps them craft monster disguises to safely navigate the town. The kids head for the Wardenclyffe Tower while Stine arrives in town. At the tower, the kids encounter Slappy and Walter and discover that Slappy has turned Kathy into a living dummy. Sonny and Sam overload the reactor while Sarah fights Slappy. She defeats Slappy by kicking him into the electrified coil atop the tower, which blasts him into the sky. Sarah opens the book and combines it with the reactor’s energy to suck all the other monsters into the Haunted Halloween manuscript, while also returning Kathy and Walter to normal. Stine arrives, congratulates the kids for defeating the monsters, and gives Sarah advice for writing her essay.
Sometime later, Kathy and Walter start dating. Sonny wins the science fair and Sarah gets an email saying she got into Columbia University. Back in Stine’s cabin, Slappy appears. He reveals that he has survived and has written a book of his own where Stine is the main character. He then opens his manuscript, sucking Stine inside