The movie begins with Goku fighting in another Other World Tournament against Pikkon. At the same time, a teenage “psyche ogre” that is attending the evil-purification machine in Other World is distracted with his heavy metal music. He doesn’t pay attention and one of the tanks on the machine gets full and breaks, releasing all of the collected evil energy at once. As a result, the barrier keeping the dead confined in Other World is destroyed, and many of the dead souls are now wreaking havoc on Earth. This includes previous villains from the Dragon Ball Z series and movies, and also some real life ones like Hitler (simply “The Dictator” in the English version), and Gohan and Videl are called on to help.
Bulma and the others gather the Dragonballs, and summon Shenron. They wish for all the undead souls to be returned to the Other World, but Shenron informs them that while he can send them back, there is nothing stopping them from returning, and that something is wrong in the Other World and only King Yemma can resolve the problem.
The Grand Kai sends Goku and Pikkon to see King Yemma. When they arrive, they find that the Other World has been changed, filled with colorful jelly bean-like objects which encase structures and people. King Yemma has been imprisoned within one of these objects. Goku and Pikkon attempt to break the barrier, but it absorbs any energy thrown at it. King Yemma informs them that a monster created by the evil spiritual energy is atop the check-in station. Goku begins fighting the monster while Pikkon attempts to destroy the barrier. The monster named Janemba has a child-like mentality and possesses strange powers that allow him to defy reality (such as creating a portal to punch through that leads right to Goku), and even as a Super Saiyan 2, Goku is losing. He then powers up to Super Saiyan 3 and swiftly dominates Janemba. Though seemingly defeated, Janemba reduces into a smaller, more powerful form.
On Earth, Mr. Satan (Hercule in the English version) is winning over the zombies. Frieza and his henchmen arrive shortly after Gohan and Videl get rid of a large group of zombies. Frieza begins to taunt Gohan. Gohan defeats him with one punch and all the other villains flee. Back in the Other World, Pikkon discovers that cursing at the jelly bean prison causes it to crack. Meanwhile, Janemba creates a sword from a spiked mallet, and easily gains the upper hand against Goku, eventually launching him into the Blood Pond and trapping him within. Janemba then slices the Pond down piece by piece until he traps Goku within a tiny portion. Just as Janemba is about to deal the final slash, Vegeta dashes in and helps Goku; due to the imbalances caused by Janemba, Vegeta has regained his physical form. He starts to fight Janemba in his Super Saiyan 2 form, but is no match for him. Goku breaks out of Blood Pond in time to catch Vegeta from being flung into the Mountain of Spikes. Both Goku and Vegeta take cover in the cage of spikes. Goku knows they cannot win as separate entities, so he suggests using the fusion technique. Vegeta becomes skeptical, first off complaining that the pose for the Fusion Dance is embarrassing, and furthermore telling Goku he would rather die than to fuse with a low class Saiyan. Goku calmly reminds Vegeta he is already dead. Janemba launches a neeedle blast that destroys the Mountain of Spikes; Goku and Vegeta barely avoid the blast. Goku persuades Vegeta to try the Fusion Dance. Vegeta, however, fails to extend his forefinger at the last second, and Veku is created. This fat fighter is weak and can do little but fart (although the farts are potent and debilitating). Just as Janemba attacks, the Fusion runs out and Goku and Vegeta escape. Vegeta curses Goku, saying Fusion is useless, but King Kai informs them that Vegeta did not extend his forefinger. Pikkon arrives after giving up on the ice-like shield, and begins to fight Janemba to give Goku and Vegeta time to perform the Fusion Dance. Pikkon figures out that Janemba is made of the same material as the shield, and curses at him. It works, and part of Janemba’s body disintigrates. However, Janemba is able to incapacitate Pikkon, but those few moments allow Goku and Vegeta to successfully perform the Fusion Dance, forming Gogeta. Meanwhile at Earth, Goten and Trunks feel their father’s fuse so they decide to fuse forming Gotenks.
Gogeta is a formidable warrior; he quickly defeats Janemba with his ultimate attack, the Soul Punisher. The teenage demon returns. Scared by the appearance of Gogeta, he runs away. Other World is returned to normal and King Yemma is freed. All of the souls are returned to the Other World. Goku and Vegeta bid each other a good-natured farewell as Vegeta disappears again. On Earth, Gohan, Goten, Videl and Trunks are returning home. Goten and Trunks joke about Gohan and Videl kissing back in town, and are chased home by a cross Gohan (in the original version, Goten and Trunks brag about how they fought against “someone you know”, and annoy Gohan by not telling him who it was).