Louie's family has recently moved to a new neighborhood. Lonely and feeling friendless ("New Kid in the Neighborhood"), Louie goes back to his room to play with his favorite toy, Red, his little red plane. When Red "suggests" they take a trip back to his old neighborhood, Louie makes a diorama out of an old shoebox covered with purple cellophane. He looks into it and, in his imagination, they are off! ("Big Red Plane").

As they fly towards the old neighborhood, sinister doings are afoot. A gang of odd-shaped creatures – a mouse, a monster, a sack, a broom and a flower – are plotting to trick Louie when he arrives ("We've Got a Welcome for Louie"). Louie lands in his old neighborhood, but something is amiss. It's dark and empty. Louie calls out for his old friends, but the only answer is the echo of his own voice. Suddenly, a whistle shrieks. Dark shapes jump out and chase Louie through the streets and alleys ("Shadows"). Louie is trapped, and the gang of creatures drag him to their hideout, where they give him the third degree. Just when it looks really bad for our hero, he notices, peeking out from the bottom of the "Sack," the tail of the neighborhood cat. These aren't frightening creatures at all. These are Louie's old friends, dressed up for Halloween. After the trick is revealed, they all set out to celebrate Captain Louie's return ("Trick or Treat").

Louie and the Gang are approached by Julio, a new kid in the neighborhood, with whom they become fast friends. They are all about to set off for some trick-or-treating when one of the gang, Ziggy, mentions that someone has moved into Louie's old place. Indignant that anyone one would dare to try to take Louie's place, they declare this new kid a LOOZA! and, led by Julio, they head off to "trick his house up good" ("Looza on the Block"), only to discover that the LOOZA's house is none other than their new friend, Julio's!

Next the Gang decides to go to Ziggy's house. They have never been there before because he lives in a scary part of town. Ziggy seems oddly resistant to the idea, but the gang insists. Ziggy is forced to admit that he didn't want his friends to go to his place because his family can't afford the Halloween decorations and candy. Louie gets an idea to help out Ziggy ("Spiffin' up Ziggy's").

Halloween is almost over, so Louie suggests they go trick-or-treating by plane ("Captain Louie"). When they land, it is time for Louie to go. He bids his friends a warm farewell ("Home Again") and finds himself transported out of his diorama world and back into his new home. He gathers up his courage and heads outside, where, dressed as "Captain Louie" in his Red Plane, he makes new friends as the Halloween hit of his new neighborhood ("Finale," "New Kid in the Neighborhood – Reprise").