Fred Mumford returns to Earth from the spirit world to open a business called 'Rentaghost' which offers ghosts, spirts and poltergeists on a daily or weekly rental basis and is having trouble paying the rent on his shop.
The shock of finding out his tenants are ghosts sends Mr. Meaker to the hospital with appendicitis. However, when the Rentaghost team visit him, they see an opportunity for a job - as hospital ward entertainers.
Fred's parents pay a visit, as Rentaghost embark on a new venture in storage, using Claypole's powers to shrink objects. Unfortunately his mischievous side becomes dominant and he decides to shrink Fred and Mr Meaker too.
Mr Meaker hires an efficiency expert to evaluate Rentaghost, who promptly dismisses Fred. Claypole casts a King Midas spell on Mr Meaker, ensuring that everything he touches turns to gold, literally.