On the outskirts of town, on a winding road, two cars careen haphazardly, before crashing. Out of the cars pile 8 teenagers, who begin to dance in the rain and mud. Once their youthful gyrations are spent, they see a sign that mentions the nearest town being Hainesville. They then decide to head on down there.
We cut to the town, where Mike Barry and Nancy Carlson are having a close moment in Nancy's house. Mike discusses going to the local go-go as well. They are interrupted by Nancy's younger brother, Genius, who has just mixed a number of incompatible chemicals. After he leaves, Nancy and Mike try to pick up where they left off. However, an explosion in the basement causes them to sprint down to Genius' lab.
Inside, Genius explains that he put an electrical charge to the chemicals, which caused the explosion. The substance in the jar has taken on a strange coloration, and is also making beeping noises, almost seeming live.
As Mike, Nancy and Genius begin to try and clean up the lab, a cat sneaks into the basement and begins to eat at the Goo. Without warning, the gang are face-to-face with an enormous cat. Genius commands his dog Wolf to get the cat. Wolf takes a wild swipe and scratches the cat's nose, causing the cat to retreat. Realizing what the stuff can do, Mike takes some of it, and feeds it to some ducks. Before their eyes, the ducks grow to be 7-8 ft tall. Mike soon realizes that they have a valuable substance on their hands. But while he ponders this, two things happen: 1)Wolf eats some of the Goo and grows, and 2)The ducks escape from the yard.
Meanwhile, the 8 delinquent teens have taken up in the abandoned theater, preparing for the evening's go-go dance. They make their way to the dance and partake in the festivities. Soon, the crowd is shaken up as a pair of ducks waddle through the front door. But soon, the panic turns to smiles as the ducks begin to dance. In no time, Mike and Nancy arrive at the club, and are soon interrogated about the ducks. Several of the delinquent teens hear about the 'million dollar secret,' and formulate a plan to get the formula. However, Jean's plan to seduce Mike, and Fred's plans to get Nancy to talk fail.
The next day, the giant ducks are roasted and prepared for the local teenagers. During the festivities, Genius manages to make a concoction very similar to the Goo. He hops on his rocket-powered bicycle and heads to the park, only to have the Goo dissipate before his eyes. Nearby, Elsa, hears about Genius' talking, and convinces him to go for a walk (hopefully to tell her more about the Goo).
Back at Nancy's house, Mike & Nancy hide the remainder of the goo in a cabinet. However, it seems that some of it made it into the hands of a spider, who suddenly knocks down some nearby boxes, startling the two. Mike manages to electricute the spider, and he and Nancy return to the park, where a musical number is going on. As the number goes on, the delinquent teens break into the house, and steal the goo, only to have one of them set off Genius' burglar alarm. This causes the others to come running from the park, where a major scuffle ensues. As the fight rages on, another song drifts over the battle, until by the end, almost everyone has been knocked out.
While Mike, Horsey and the others recover at Nancy's house, the delinquent teens go back to the theater, and decide to take the Goo themselves, which causes them to grow to 30ft tall, bursting out of their clothes. At first they are shocked and scared, but soon realize they can use this to their advantage. The girls are fearful of being nude, but realizing all the fabric and cloth from the stage curtains, they are soon overjoyed and begin to fashion some clothing, as the guys make some of their own.
Back at the park, Mike and Nancy share a close moment in the grass, before being interrupted by Horsey. Horsey is still upset that the delinquent teens got away, and demands Mike help him find them. As they talk, the giants enter the square, and demand that music be played for them to dance. During the dance, Georgette reaches down and scoops up Horsey, forcing him to 'dance' with her. Finally, Mike tries to stop the dancing, and gets brushed aside by Fred. Fred then begins to explain their intentions, before the Sheriff and his deputy pull up. After trading barbs with 'the law,' the giants agree to return to the theater.
The next day, a group of people go to the theater to confront the giants. However, the giants have actually kidnapped the Sheriff's children, his daughter Cora, and his son Bobby. The giants manage to convince the Sheriff to turn in the town's guns, lest something bad happen to his children. The Sheriff has no choice but to comply.
Later on, Harry goes out, and breaks down several telephone poles, cutting off phone communications. Rick takes care of the police communications, and smashes the Sheriff's car for good measure.
As Jean supervises the turning in of rifles, the Sheriff sits nearby, distraught at the scene. Nancy assures him that Mike is going to get help. With the road blocked, Mike tries to run out of town for help. However, in the nearby woods, he comes across Fred, who uproots a tree and badly hurts him. Mike has no choice but to return to the village under Fred's watchful eye.
Later that night, the giants turn on their music, and begin to dance, even wilder than the night before. The Sheriff tries to intervene, but they tell him he's violating curfew. Mike also tries to intervene, but is also belittled. Mike returns to Nancy's house, where the giant's dancing is so wild that the entire house shakes from their movement. As the dancing continues, the giants get more and more wild. Some of them smash buildings, and a woman and her baby are killed when the ceiling in their house caves in on them. From afar, Mike, Horsey, Nancy & Red watch, and Mike figures that they need to take a hostage of their own for leverage.
The next day, the area is in ruins from the giants' partying. Fred comes into the neighborhood, and is accosted by Mike, Horsey, and several others in their hotrods. Fred looks to be at their mercy, until Nancy's scream permeates the air, and we see that she has been placed ontop of a nearby building by Tim. Fred orders Nancy taken to the theater, and the guys give up trying to take down Fred.
Back at Nancy's house, Mike and teh others converge to discuss a new plan. A plan involving dancing, ether, and a slingshot.
Later at the theater, Red does a dance to catch the boys attention, while the girls busy themselves with other things. One of the boys plays a miniature bongo drums with his fingers. Fred offers Nancy some chicken, to which she refuses, and refutes his plans to take over.
Suddenly, a rock whistles through the room, and strikes a nearby gong, interrupting the performance. Merrie leans down looking through the lobby and sees Mike with his slingshot. She finds it amusing, until he take a shot and almost hits her. Soon, the giants have amassed outside, where Rick uproots a metal flagpole, and gives it to Fred to use as a spear.
Fred orders Merrie to go back inside to watch Nancy and the kids, who are placed on an overhead catwalk. As Merrie enters, she finds Red still inside. She orders Red to leave, as Mike's friends break into the theater from a hatch in the roof. Merrie has her head turned, as Mike's friends make their way on a catwalk slightly above and forward of where Nancy and the kids are. The guys begin to lower Horsey with some ether, but his actions are interrupted when one of the kids sneezes and Merrie turns around. Horsey then accidentally plummets into Merrie's cleavage. After righting himself, he stuffs the ether-filled cotton into her face, and she collapses to the stage floor. Mike's friends help liberate Nancy and the kids, but take some time trying to find the hidden guns.
Meanwhile back outside, Mike is running here and there, perspiring profusely, angering Fred who can't seem to hit him. Finally, Mike is cornered. Having had enough, Fred lifts a sports car from the street, preparing to squash him with it.
As Merrie comes to and joins the others, Genius comes streaking down the street, the antidote swirling around the giants, shrinking them down to size, their once-fitting clothing now too large. As the townfolk converge on them, the kids take off running for the town. As they run off, the townfolk rejoice, and Mike and Nancy share a kiss.
Looking off into the distance, the townsfolk can see the remains of the kid's giant clothing fluttering in the wind, as they make for the nearby woods, some of it having come off in their escape.
The camera pans back from the jubilant crowd of villagers, before the title of the film returns to the screen.