As Mystery Incorporated investigates a series of thefts by the ghost of Puppetto the Puppeteer and his puppet, Batman shows up. Fred manages to capture Puppetto and the puppet, and Mystery Inc. deduces them to be Martian Manhunter and Detective Chimp. Batman reveals it was all a test for them to join the Mystery Analysts of Gotham City, which they accept. Unbeknownst to the heroes, they are observed by a red-cloaked figure.
A week later, Batman foils a gold robbery by Riddler, Catwoman, and Killer Croc with help from the Question and Aquaman. Aquaman expresses interest in joining the Analysts, but is rejected for not being a detective. Mystery Inc. arrives at the Analysts' headquarters, meeting Question, Black Canary and Plastic Man, as well as a tagalong Aquaman. When an alarm sounds from Gotham Chemical Storage, the Analysts head for the warehouse, finding that several vials of a radioactive isotope have been stolen. The red-cloaked figure appears, declaring himself to be the Crimson Cloak, and swears revenge on Batman and Gotham for making him into a ghost. Crimson Cloak sets the storage on fire, but the Analysts escape.
Believing it to be connected to the Crimson Cloak, Batman discloses his single unsolved case; during his first year of crime-fighting, he attempted to stop Professor Milo from experimenting with an unstable teleporter but was unable to stop the death of one of Milo's assistants, Leo Scarlett. Batman and Mystery Inc. deduces that the Riddler is involved after Daphne discovers he was Milo's second assistant under an alias. Following this lead, Batman and Mystery Inc. travel to Arkham Asylum, where Riddler confirms their suspicions and advises them to check Arkham's cemetery. As they leave, Crimson Cloak releases Clock King, Harley Quinn, Killer Croc, Mr. Freeze, Poison Ivy, Mad Hatter, King Tut, Bookworm, Scarecrow and Two-Face from their cells, although Batman manages to re-imprison them.
At the cemetery, Batman and Mystery Inc. discover a clay footprint inside its mausoleum, but Harvey Bullock and the Analysts attempt to arrest them after the stolen isotope was planted in the Mystery Machine. Batman and Mystery Inc. flee into "No Man's Land" where they run into Bane, Blockbuster, Joker, and Penguin. The group escapes and go to the Batcave. Batman leaves to investigate Milo's laboratory where Aquaman and Question join Batman to find the teleporter restored by Crimson Cloak. Crimson Cloak attacks, seemingly killing Question and capturing Batman and Aquaman. In the Batcave, Velma attempts to analyze the clay footprint only for it to come to life and attack. After overcoming it using a Bat-Dehydrator, they deduce the Crimson Cloak's true identity for themselves.