The story starts with SpongeBob and Mr. Krabs visiting Plankton's new breakfast restaurant after he decided to close the Chum Bucket. Mr. Krabs initially thinks it's another trick, but soon changes his mind, when a mysterious voice is heard throughout the city, demanding that he speak with Bikini Bottom's leader. To make sure his demands are met, a swarm of vacuum tanks begins to kidnap the townsfolk, causing the three to hide. Then, a portal appears with a strange bug-like creature (Tentomon) exiting out of it, and displays a message to SpongeBob from two humans, who introduce themselves as Tai and Izzy. With no other choice SpongeBob decides to trust them, and follows Tentomon through the portal, while Mr. Krabs and Plankton remain in Bikini Bottom. Arriving in Tai's house, SpongeBob meets Tai and Izzy, along with Sora, Matt, Agumon and two other quartets, who happen to be Yugi, Téa, Joey, Tristan, Nate, Katie, Eddie, and Bear. Remembering that he's on land, SpongeBob coats himself with a self-regenerating moisture that Sandy made for him to keep him healthy. Izzy then explains that his latest invention, the Super Portal (a device originally made to open a portal to the Digital World) had been copied by Samson Kaylock, a mafia leader that Izzy's family is familiar with, who went on to use it to form a Syndicate with Don Grouper, and Weevil Underwood; they have already begun stealing energy from each of their worlds for their masterplan. Since Kaylock's lair cannot be found, SpongeBob, Tai, Yugi, and Nate start with the other worlds first by stopping the Syndicate from siphoning any more energy, with the rest staying at Tai's house to monitor them.
Beginning with Domino City, the heroes arrive in Weevil's new lair by accident, where he reveals his special portal is siphoning energy from the Spirit World to further the Syndicate's plans, and as a precaution, Weevil has captured Solomon, Yugi's grandfather, and Serenity, Joey's younger sister. Weevil then knocks them out and imprisons them in the lair's prison. Befriending a fellow convict, the heroes escape after knocking out Rex Raptor. Yugi leads the heroes to the school, where they meet Yugi's friend, Bakura, who explains that some of Weevil's bug monsters have possessed the citizens. Yugi drives out Weevil's bugs before the group cuts through a nearby graveyard to Weevil's lair. Upon arrival, Tai realizes that generators are keeping the portal open. The gang destroys the generators, thus shutting off the portal. Confronting Weevil, Yugi unleashes the monsters from his deck to pummel Weevil's. Despite the loss, Weevil gloats the Syndicate is building something and they already have sufficient energy to help power it before fleeing.
The heroes' next destination is Bikini Bottom (with Tai, Yugi, and Nate being able to surprisingly breathe underwater). After a confrontation with some droids, they meet Mr. Krabs and Plankton, along with Patrick, Squidward, and Sandy, who explains that Grouper is using those vacuum tanks, known as Harvesters, to capture jellyfish to extract power from their sting; he has also imprisoned Officer Rob Johnson, to secure the release of the rest of his executives. Sandy sends them to Jellyfish Fields to meet up with Brady, a human that Sandy once befriended, but upon meeting him, he is sucked into a Harvester. After destroying the Harvesters, the group finds themselves on the Flying Dutchman's ship; for he wants them (minus SpongeBob since his experience) to be his new crew. However, Yugi, being an expert with monsters, persuades him to let them go in exchange for bringing back his old crew. Upon arriving at the factory that Grouper is using, they free Brady and the jellyfish. On the roof, they face Grouper, using a robotic crab that Plankton once made, and rescue Officer Johnson. The heroes then learn that the Syndicate is extracting energy for a Doomsday Device, and the army of Yokai that they established in Nate's home is still supplying power to it.
In Springdale, the heroes infiltrate a golden fortress, finding a stream of Yokai energy ending there. After cutting off the fortress' supply of Yokai energy, they arrive at Nate's school. There, they encounter Aaron, Nate's dad, who explains that the Syndicate is extracting the energy to feed the Doomsday Machine. After freeing some of the Yokai that Nate has made friends with, they reach the extraction machine that's been siphoning Yokai energy, where they defeat a massive flying droid fueled by Yokai energy. SpongeBob and Yugi deduce that the villains have retreated to Odaiba to regroup after being defeated. Unbeknownst to others, SpongeBob wonders if there are other heroes out there.
They return to Tai's home, where they meet Kari, TK, Davis, and Ken, when suddenly Kaylock contacts them, revealing that the Doomsday Machine is almost finished. SpongeBob sees something wrong with Agumon, making Izzy realize Kaylock planted a flea-sized robot on Agumon to spy on them. Realizing that the only way to stop Kaylock is to trace the flea bot's signal, the heroes use a shrink ray that Sandy made to shrink down and search around Agumon, and after defeating the flea-bot, the return back to normal size, and hack the flea bot's circuitry to locate the Syndicate's lair. Upon arrival, the Syndicate declares that Odaiba will be destroyed as a show of their power, and the machine will protect them from the destruction. Despite the heroes' damaging the machine, the villains continue the count down. SpongeBob miraculously unplugs the Doomsday Machine, and Kaylock laments that he had forgotten to finish the back-up power supply, while Weevil and Grouper manage to escape (with Weevil getting back to his home, and Grouper (inadvertently) blasting himself into space with his executives and two other droids).
With Kaylock in prison, the heroes meet up at Bikini Bottom to celebrate. Still wondering about earlier, SpongeBob declares a new alliance between the four groups, which they agree to, calling themselves "Team Arch" (as a reference to Nickelodeon's logo).
In the post-credits scene, Group and his executives (who are stuck in the broken space pod that they used to escape) are being pushed by the two droids. While the executives lament, Grouper secretly calls another mysterious stranger about Samson's failure. The stranger tells Grouper not to worry, since he has "already started on a new plan to end SpongeBob".
