Bill Martin, is the proud owner of a small boulder of an island off the coast of Florida called "Morgan's Island." It is a deserted useless rock to Bill, but by pure chance he stumbles across a treasure map pointing to his island. The map is presented to him by a peg-legged old sailor, Tobias Clump, after Bill and his friend "Stuff" Oliver saves the man from drowning. Clump was pushed into the water by a "phantom," who got away with part of the treasure map. Clump tells them that the map shows the way to infamous buccaneer Sir Henry Morgan's twenty million dollar treasure. Soon after this, Bill's cousin George offers to buy the whole island for the amount of $20,000, but Bill isn't willing to sell. Instead he brings the map to a reputed cartographer named Jasper who claims that the map is fake—it's a very well-made forgery. Letting go of the thought of the legendary treasure, Bill instead thinks of making some money by starting a "treasure hunt" cruise to his island, for fifty dollars apiece. He involves Stuff in the plans and together they start out for the island to plant a fake treasure for the tourists to find. On their way they are involved in a traffic accident, and by "accident" meet the posh Wendy Creighton and her boy toy, Thurman Coldwater. Since Bill is a little short of money he persuades Wendy to take his treasure cruise.

The phantom that stole part of the treasure map from Clump reappears and warns Wendy and tells her that she will die if she stays on. She doesn't take this seriously, but the phantom appears once more, this time in her bedroom at night, and warns her again. Everyone believes that someone is pretending to be the ghost in an effort to scare them all off. A man in a cape kills Rod in front of Arleen, but when she gets back to the rest of the group the private investigator McGoon suspects her of being the killer. Bill suspects Tobias, who is still missing, and a "footprint" from a peg-leg is found near Rod's body. It turns out there is big reward set for the dead gangster, "dead or alive". Tobias reunites with the group and tells of a key he has found. It is supposed to unlock a torture chamber in the castle, where Sir Henry Morgan's treasure is hidden. The group enters the chamber but finds only a single gold coin. As they return to the castle's main hall there is a note on the table saying "nine left". The cross-bow fires again, but misses Clump by an inch, killing the phantom instead. It turns out the phantom was no other than an old shipmate of Clump's. On the phantom's body they find the rest of the treasure map.

Bill, Stuff and Clump go to find the treasure, leaving George and Wendy to themselves in the castle. They find a new note saying "eight left" and when George tries to find the anonymous killer, Wendy is abducted by an unknown person. When the rest of the group is back at the castle they find George murdered inside one of the armor suits. Bill realizes that Jasper must be the killer, but when Bill confronts him with Rod's gun in his hand, it turns out the gun is unloaded and Jasper gets the advantage. Bill, Stuff and Wendy escape, but only to find themselves trapped in a secret passage inside the castle walls. As they get rescued by Clump, it turns out the passage leads directly to Sir Henry Morgan's treasure. Jasper follows and finds them, forcing them on to the treasure chamber. As they open the final passage door an axe falls down to kill Jasper. The rest of the group enter the treasure chamber and opens the chest, only to find the skeleton of Sir Henry Morgan himself. Disappointed the group members make their way back to the surface, where they meet a government agent, who offers to buy the whole island from Bill in order to build a naval base. After all the mysteries are solved, Bill and Wendy become a pair, making Bill worth $7,000,000.