The episode begins with Twilight showing off her "Starswirl the Bearded" Halloween costume to Spike. Not shortly after, Twilight and Spike encounter a trio of fillies and Pipsqueak trick or treating, and of course Pinkie Pie, who refuses to turn down an opportunity for free candy. Twilight asks Pinkie if she likes her costumes, but is disheartened when Pinkie doesn't know what it is. Twilight, complaining about no one knowing about her costume, and Spike, eating a pile of candy, walk through the market. Pinkie and Pipsqueak meet them, and show off their stash of candy. Meanwhile, Rainbow Dash, costumed as a Shadowbolt, drags a thundercloud over Pinkie Pie and causes it to produce a bolt of lightning, scaring both Pinkie Pie and Spike. Twilight and Apple then meet up with Applejack, who is running the apple bob, but this is ruined when Derpy Hooves pops out of the tub and drains it. Mayor then makes an announcement, telling everyone to follow Zecora to the statue of Night Mare Moon, in order for a storytelling. Zecora tells the legend of Night Mare Moon, and explains to the group that they she requires a donation of candy in order to please her. However, ironically, Princess Luna shows up, in a flurry of dark clouds, which scares everyone off but Twilight. Pinkie Pie and her group of fillies run through town, as Princess Luna arrives at the marketplace. Everypony bows down in respect for the Princess, but also expresses a great amount of fear. Twilight, however, does not display any fear as she shows an eagerness to meet the Princess. Princess Luna makes a speech in which she uses a very strong bellowing voice, which serves to only further intimidate everypony. During this speech, she exclaims that she only seeks the love and affection of her subjects, and wishes to improve the festival. However, as she has accidentally imbued fear into her subjects, they do not wish to have anything to do with her. Feeling rejected, she decides to leave the market, and spend time at the statue of Night Mare Moon, where Twilight finds her. Luna at first, compliments Twilight on her costume, knowing who she means to be costuming, as opposed to everyone else. Twilight explains to Princess Luna that she was badly received due to her speaking tone and volume, and therefore decides to bring her to Fluttershy, who she believes can help her improve the way she speaks to ponies. Fluttershy refuses to answer her door at first, exclaiming that she has no candy and that she doesn't want visitors on Nightmare Night. When Twilight reassures her there's nothing to be worried about, she opens the door, but once she sees Princess Luna, whom she misidentifies as Night Mare Moon, she runs back inside. Twilight forces Fluttershy out of her home, and Princess Luna begins to inquire about how to improve her tone, but this only further scares Fluttershy. When Fluttershy attempts to go back inside, Twilight slams the door in front of her, blocking her path. When Princess Luna feels that her tone has improved, she thanks Fluttershy by hugging and exhaling her thanks at her, but this scares off Pinkie Pie and her group of fillies once again. Later on, Princess Luna and Twilight find Applejack in the town centre, where Twilight asks Applejack to give tips on Luna on how to be more accepted. Her top tip is to have fun, which Luna sadly does not know about. After playing on several carnival games, Luna shows her appreciation for the fun and the whole town begins to fear her less then they did before, and she goes as far to tell her subjects to call her Luna, and do away with the formality of "Princess". However, when Luna selflessly rushes to save Pipsqueak from drowning in the apple bob, Pinkie Pie once again thinks she is doing more evil ("eating" Pipsqueak) which causes the ponies to become scared once again. Luna tries to obtain peoples trust again with fun but goes a bit too far and causes havoc across the town. Fed up, she declares that Nightmare Night is cancelled forever, out of anger caused by her failure to look good to her subjects. Twilight once again sets out to find Princess Luna, and finds her walking sadly across a bridge, disappointed in herself for being seemingly unable to win the hearts of her subjects. She rejects Twilight's help at first, so Twilight finds another method, in which she lures Pinkie Pie into an alleyway with a trail of candy, and tells her that Princess Luna is no longer evil, and to stop shrieking in fear whenever she sees her. Pinkie Pie agrees to this, but as she is about to shake hooves with Princess Luna and make peace, Rainbow Dash inopportunely plays her lightning prank, scaring Pinkie Pie, who believes it is Princess Luna who made the lightning. Twilight chases Pinkie Pie down, and pins her down, and Pinkie Pie tells her that she is only being scared, because it is fun to be scared. This sets off a plan in Twilight's mind which will win Princess Luna the hearts of her subjects. As the ponies clean up the mess in the town centre, the Mayor reminds everyone that they still have to give their offerings of candy to Night Mare Moon. Once at the statue of Night Mare Moon, and once they have given their offerings, Princess Luna, in the form of Night Mare Moon appears in person to the group, and scares them once again. Once they have been scared off, Night Mare Moon transforms back into Princess Luna, but Princess Luna is still afraid that Twilight's plan did not work. However, when Pipsqueak tells her that he loved the way that she scared them, that he wants her to come back next year and scare them, and that she was his favourite Princess, she realises that she is indeed wanted in Ponyville, and exclaims that there will be more Nightmare Nights. Back in the town, Luna participates in more carnival games, and also has fun scaring some more ponies. At the end of the episode, Rainbow Dash once again shows up with her thundercloud, and when she is about to scare Twilight and Spike with lightning, Princess Luna scares off Rainbow Dash with her own lightning before she had a chance to scare them. Twilight learned that one of the best things about friendship is to give it to others and help it find themselves. Also, everyone in Ponyville learned that even if somepony is a little intimidating or even scary, when you offer them their friendship, they'll discover a whole new pony underneath.