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The woods on the edge of town are haunted. The locals are full of strange tales concerning witches, ghosts and buried riches hiding deep within the forest. This is why Jake and Samantha, swear they will never set foot in the Haunted Forest. That is what they think until a routine homework assignment leads them to the caretaker of the local cemetery, who tricks them into searching for a legendary fortune in the woods.
Sam convinces Jake that they should visit Old Man Buzzard at his shack on Cemetery Hill with intentions of interviewing him for their report on local history. The one-eyed man welcomes them and agrees to help them with their history project in exchange for an unspecified favor. As Jake and Sam enjoy a cup of tea, the old man tells them a strange tale.
According to legend an eccentric hermit, named Buffalo Jim, buried a great fortune somewhere in the woods. On the night of the full moon, at exactly the stroke of midnight, at the base of the oldest tree in the forest, Jim's ghost appears and points to the entrance of the cave where his fortune is buried.
After telling his tale, Buzzard informs the unsuspecting hero and heroine that they will find the treasure for him in return for his help with their homework assignment. .
Jake and Sam find themselves in the Haunted Forest several hours later under the light of the full moon. Informed by the distant chiming of the bell at Town Hall that they have two hours left before midnight, and not knowing what else to do or how to get home, they strike off in search of the oldest tree in the forest.
Throughout the evening the friends encounter many obstacles that hinder their progress. As they make their way through the maze-like forest, they are chased and harassed by a phantom who refuses to let them rest. In the course of their travels they narrowly escape a herd of carnivorous creatures, are abducted by a witch and are stalked by a beast believed to be Buzzard's ferocious pet wolf, "Killer".
Despite unfavorable odds, the pair manage to find the tree, the ghost of Buffalo Jim, the entrance to the cave and the fortune within.
After surviving a final confrontation with the phantom, Jake and Sam escape the Haunted Forest to find Old Man Buzzard waiting to retrieve his prize. Much to everyone's surprise, the fortune isn't quite what was expected..