Young Jimmy is sent home from school because of an unfortunate incident at band practice. While walking home, his flute, which he calls Freddie, suddenly comes to life, turning into a beautiful bejeweled instrument that starts talking to him.

So they climb aboard a talking boat, which sets off for the Living Island. But they are quickly spotted by the wicked witch Wilhelmina W. Witchiepoo, who desires Freddie the flute. She spares no effort and eventually manages to snatch Freddie from Jimmy's clutches. Helped by the island's mayor, the dragon H.R. PufnStuf, and various other colorful inhabitants, Jimmy sets out to get Freddie back. Meanwhile Witchiepoo plans to host the witch's convention with Freddie as prize exhibit and PufnStuf as the main course. Keep an eye out for the late Mama Cass Elliot as the witch’s hench(wo)man.

And if you notice that the characters look surprisingly familiar, you’re not alone: creators Sid and Marty Krofft filed a successful lawsuit against McDonalds, charging that the company and its advertising agency had ripped off the McDonaldland characters from H.R. PufnStuf.