As the book opens, Steve is telling the reader about how much he hates first graders. Steve wanted to let out a squirrel in the girls’ locker room but it escaped and caused chaos in the gym. As punishment for this, Steve is told by his gym teacher that he can either blow up basketballs in the gym by mouth, or coach first grade soccer. He chooses to coach. Steve calls the kids animals since they are unruly brats who always torment him. The kids trick him into kicking a concrete soccer ball. After practice, Steve runs into Chuck and discovers the kids glued feathers to the books in Steve's book bag.
At the next practice the kids send their fattest member to tackle Steve. Steve declares that he will get the kids back by scaring them. Coincidently, at that moment, Carly Beth and her friend Sabrina are walking near Steve and Chuck and the two boys decide to scare them for old time's sake. The two boys attempt to sneak up on the girls but then they notice that Carly Beth is carrying her decapitated head around... of course it's really another plaster head made by Carly Beth's mom.
Steve tries to save face by stealing Carly Beth's head and playing keep away with it until Carly Beth will tell him where she bought her scary mask from last Halloween. At one point he threatens to drop-kick her head onto a nearby roof. She eventually gives up the name of the shop. Steve and Chuck head out for the party supply store where Carly Beth bought her mask. But it's abandoned! Luckily the two boys notice that the basement door to the shop has been left open and the two sneak down to steal a mask.
Chuck initially expresses some concern that maybe they should stay out of the basement, but all that changes once they find a box full of disgusting and scary masks. Steve finally decides on an old man mask, which in addition to looking hideous, feels and smells hideous. The two boys hear footsteps above them from the supposedly abandoned shop, and Chuck ditches his friend Steve, who is now stuck in the basement as the Shopkeeper from the first book clomps down to the basement. Steve tries explaining to the man that he wasn't stealing one of his masks, which doesn't work. Steve offers to buy it, but the shopkeeper will not sell it to him. So Steve makes a break for it and runs out of the basement with the mask. He and Chuck run all the way home. Steve doesn't tell Chuck about the mask, hiding it under his shirt. Once he gets home, Steve thinks he feels the mask bite his stomach.
Steve's Halloween revenge plan goes into action on the day before Halloween, as he tells his entire first grade soccer team to meet in front of the haunted Carpenter Mansion on Halloween Night to go trick-or-treating together. With his plan set, he goes home to try on the mask, in hopes of scaring his friend Chuck. However, as soon as he slides the old man mask over his head, it melds to his skin and suddenly he feels tired and starts cackling like an old man.
After scaring his dog, Steve hears his mom approaching his room. He makes up an excuse about being sick to explain his old man voice and his mom tells him from outside his door that she bought cookies. After his mom goes away, he tries to make it to the phone which takes several minutes of trying for Steve to be able to hobble in the direction of the phone. Steve reasons that maybe the same thing happened to Carly Beth with her mask and she'll know how to save him. When Steve calls her house though, her dad thinks Steve is some creepy old man prank calling his daughter and hangs up on him.
Steve craves oatmeal and laments on how he's outgrown trick-or-treating. Steve's plan is to act like the old man costume is his Halloween costume so he can leave the house without alarming his parents. Then he'll go scare the first-graders, then finally find Carly Beth and get the mask removed.
After fooling his parents, Old Man Steve approaches the rowdy first graders who were waiting for him in front of the mansion, but unfortunately instead of being terrified of him, the kids immediately become considerate and helpful, asking if he's lost and if they can help him. He attempts to convince him that he's the ghost of the mansion, but the kids cry out in concern for his safety. Several of the children take turns holding Old Man Steve's hand as they lead him to Carly Beth's house. Unfortunately, Old Man Steve looks too much like an old man and Carly Beth thinks he's the creepy man who prank called her earlier. She runs away to get her dad to call the police. Fortunately, Steve gets Sabrina's attention and her and Carly Beth, who is dressed in last year's abandoned duck costume, stop and come back to attend to Steve.
Carly Beth recaps the end of the previous book for Steve and tells him he needs to find his own symbol of love to get the mask off. Steve thinks he knows of a symbol of love, and the two rush off to Steve's house. Once inside, Steve's dog attacks him and Carly Beth has to hold the yapping little dog at arm's length so Steve can safely move around the house. Steve's symbol of love was those cookies his mom had bought him. Unfortunately, Steve's dog ate all the cookies while Steve was out. The dog tries rubbing against Old Man Steve's leg to get him to pet him. Carly Beth realizes that the dog could be Steve's symbol of love. Steve hugs the dog tight and nothing happens. Carly Beth shrugs her shoulders and figures that maybe it's different for each mask and it must take something other than a symbol of love for Steve's mask to come off.
The two trek off to the "abandoned" party shop and sneak into the basement, which is still unlocked. Carly Beth pokes around some boxes and finds an old tuxedo suit that looks like it goes with the old man mask. She holds the suit up and suddenly the old man mask floats off Steve's head and lands on the collar of the suit. The old man is now complete and alive, happily thrashing around in the room as Steve is reverted back to his old self. The old man makes a break for it out the basement door and Carly Beth and Steve don't really pay that detail too much thought as they exit, laughing.
As they're walking home, Chuck pops out wearing one of the other masks from the shop. He explains that he took the mask from the basement before he ran out of it. He also tells them that he has trouble getting the mask off and he wants their help to get it off.
Fact: In the episode "The Haunted Mask II" the first Haunted Mask is back too, and not in the book.