The abandoned Quahog Asylum is where Peter, Joe, Quagmire and Cleveland go to be inspired to write a horror movie when they feel their efforts fall flat in "Peternormal Activity".

However, after bouncing around some ideas, they hear a noise and try to leave, only to find the door locked and bars on the windows. They try crawling through a heating duct but find themselves in the basement when it breaks, unloading them in front of a figure with a hook for a hand. They manage to escape, but when confronted outside, decide that they outnumber their imagined assailant and beat him, afterwards they find out that "Albert" is the caretaker and a decorated Korean war hero before he dies from his wounds.

They decide to secretly bury his body, as well as his car that they find and keep the events a secret. But when Quagmire tries to fake a photograph to give himself an alibi, Peter decides to plant evidence to incriminate him at the burial site. There, he finds the other guys all had the same idea of framing each other and they face off, before realizing that they have their story idea. The movie doesn't go over as well as they hoped, but they pass newspaper box revealing that "Alfred" was the head of a KKK organization who had stolen the medals he wore. Feeling better about themselves they go about their normal lives, while back at the asylum, a hooked hand and a car door both emerge from the dirt.