The Wiggles and their friends are stranded at Wiggle Bay after Captain Feathersword forgets to tie up their boat and the boat drifts out to sea. They find a magic shell in the water which directs them to find a golden key.
Wags the dog helps the Wiggles dig up the key in the sand, which turns out to be the key to Davy Jones' locker where King Neptune keeps his treasures. The Wiggles send Magdalena, the mermaid, and Captain Feathersword to return the key to King Neptune. In gratitude, the King returns the boat to Captain Feathersword and sends a pearl necklace to Dorothy, the dinosaur.