When Mr. Turner quits his job to become a sock monkey salesman (which fails horribly because no one buys them, noting they don't do anything), the Turners turn their house into a bed and breakfast inn to avoid bankruptcy. Unfortunately, their first guests are Mr. Crocker, Dark Laser, and Tootie. Timmy cannot make any wishes to rid himself of his guests, because if he does then Crocker's Magic Detectors will track the magic back to his fairies and capture them.
Since Timmy's dad has quit his job to pursue a dream of making and selling sock puppets, leaving Timmy's mom stuck making shoes for meals, Timmy's parents decide to open up a bed and breakfast to help their cash strapped family. Among the first guests are Mr. Crocker and Dark Laser, each with a purpose to get to Timmy: Crocker wants to find Timmy's fairies, and Dark Laser wants to destroy Timmy. While attempting to flee his adversaries, Timmy hides in his bedroom room and immediately notices his bed has become a bunk bed. Tootie was waiting for him at the top bunk, and broke open her piggy-bank just so that she could stay a night with Timmy and kiss him. Timmy hides out in his tree house until Tootie finds him again, she busts through the ceiling dressed as a "ninja of love". Timmy manages to escape again by roping out of the window. Timmy also realizes he cannot use his fairies to wish his unwelcome house guests away without the magic setting off one of Crocker's contraptions.
Dark Laser and Mr. Crocker are playing charades with Timmy's parents. Dark Laser is up first, Crocker thinks his charade is "capturing a fairy" while Mrs. Turner correctly guesses that Laser's charade was about capturing and destroying Timmy. They starting chasing Timmy again, who hides in the bathroom for the rest of the day until bed time. When he attempts to sneak out at night, his three adversaries are still outside waiting for him. the Scooby Doo-like chase musical montage begins to play as Timmy, his fairies, Crocker, Dark Laser, and Tootie chase each other through a bunch of doors in the house. While chasing each other, they run into a boy and the dog who look like Shaggy and Scooby from the aforementioned cartoon, who were being chased around by a Headless Horseman. For a moment, Timmy manages to trick the guests into running outside. While they are attempting to get back inside, Timmy devises a plan using his father's sock puppets.
Using Cosmo and Wanda's magic to reanimate his Dad's boxes full of sock puppets into a sock puppet army which attacks the guests. Cosmo, Wanda, and Poof are able to disguise themselves amongst the magic sock puppets so they can't be detected. Crocker's magic detector invention is destroyed, and he flees the scene in his van which converts into a jet plane that immediately crashes mere seconds after taking off. Dark Laser is easily dispatched and driven from the house when Wanda accidentally disintegrates him, and then Timmy wishes Laser back to life because Wanda went "too far" (nearly killed him). However, Tootie easily defeats the last of the sock puppets with ninja skills, so Timmy asks her if she'll go home if he kisses her. Tootie wants a kiss on the lips, but settles for a kiss on the cheek as long as she can tell her friends it was on the lips. Timmy kisses her and she blissfully thanks him and floats out of the house. Exhausted, Timmy has one more wish: That he was in bed. As he is poofed beneath his covers, he realizes Abraham Lincoln is in his bed too, so Timmy wishes Abe back to Gettysburg.
The next morning, Timmy's parents open up a restaurant, with Timmy as the waiter. Three new guests show up: Francis, Vicky, and the Headless Horseman. They ready their weapons and ask for "the fried twerp to go" while Timmy mutters "Yep, that figures".