In the episode in question, Billy accidentally ruins Harold's lucky pants by ripping them with The Reaper's Scythe, and calls for the Kids Next Door for help. As Sector V finds it difficult to remove the pants normally, they take Billy to the KND's Submarine Laboratory in order to remove them, while Numbuh 1 stays in Billy's House disguised as him in order to cover him up.
Once Billy is taken, Numbuh 1 meets Mandy, who doesn't fall for his disguise and demands to know Nigel's identity and what happened to the real Billy. After a bit of torture in courtesy of Fred Fredburger, Numbuh 1 tells Mandy all about the Kids Next Door and how they have taken Billy into custody. After hearing everything she wanted to hear, Mandy leaves Nigel on the house while she grabs his sunglasses and states that she'll pay a little visit to his friends. Numbuh 1 tries to interviene, but Grim appears (actually falling for the disguise), and demands to know what happened to his Scythe.
After the Delightful Reaper is created, Sector V minus Numbuh 2 (who was assimilated with the Reaper) reports to Numbuh 362, and she asks where's Numbuh 1. Suddendly, Mandy appears, impersonating Nigel, and everyone but Numbuh 5 falls for her disguise, but Mandy is able to lock her up. She then explains to Rachel that many children like Abby are losing their minds, and states that it caused is by a virus implated by the adults. Once finished talking, Mandy demands some changes around the Kids Next Door.
Once Numbuh 5 returns from her quarantine, she founds that Mandy had taken over the organization and declared Numbuh 362 as having the same disease as Abby. After ordering to be referred to her real name and renaming the KND as the MND (Mandy New Dictator), Mandy demands immediate imprisonment for Numbuh 5 and has her guards (Kuki and Wally) to lock her up as fast as possible.
After a while, Nigel and Grim finally arrive at the Moonbase, only to find it reshaped to ressemble Mandy's hairstyle. Once Mandy explains that she plans to use the KND's 2x4 Technology for world domination, she finds out that the Delightful Reaper is on a rampage and decides to deal with them herself, and locks up the Reaper and Nigel up on the Moonbase's prison.
Back to Earth, Mandy, Numbuhs 3 and 4 arrive with the M.A.N.D.R.O.B.O.T. (Monkeys And Nice Doggies Relax On Bellies Of Turtles) in order to destroy Billy and the Delightful Reaper. But after the latter was proven to be almost indestructible, Mandy is almost assimilated, but Grim and Numbuh 1 (who've managed to escape the prison with the help of Numbuh 5), show up on a giant skeleton armor and tries to defeat the Reaper, but it also proves to be no match for the force, due to Harold's lucky pants being immune to supernatural energies. Mandy decides to take advantage of the Reaper's invicibility and allows herself and her copilots to fuse with the entity, reshaping it into her own image. But before she can take down Nigel and Grim, Harold appears and claims back his lucky pants, which causes the Reaper to have its weak spot exposed, and the duo manages to defeat it and rescue all of the children fused with it.
Back at the Moonbase, Numbuh 362 congratulates Nigel and Grim for defeating the Reaper and stopping Mandy from taking over the KND. Mandy, however, states that they haven't seen the last of her and flies away from the Moonbase, escaping any punishment.