This episode starts at the surface of the ocean. A struggling artist furiously draws his picture with a number two pencil. The pencil slips from his hand and falls down to the Bikini Bottom. It lands in between Spongebob and Patrick while they are playing rock-paper-scissors with bubbles. The two friends begin to doodle with the giant pencil. They soon come to find that whatever they draw would come to life. Spongebob decides to draw a doodle version of himself which has come to be known as Doodlebob.
He drew Doodlebob to try and mess with Squidward but he ended up beating up Squidward and stealing the magic pencil to do evil in the Bikini Bottom. After trying very hard Spongebob is able to erase Doodlebob with the eraser from the pencil. However he didn't erase one of Doodlebob's arms. The arm comes back in the middle of the night and steals the pencil back. He redraws his body and attempts to erase the real Spongebob. The pencil snaps in half and Spongebob is left with the pointed side and Doodlebob with the eraser side. Doodlebob sharpens the pencil and pins Spongebob up against a book shelf. However Doodlebob stepped on a piece of paper and his foot is absorbed into the paper. Spongebob quickly traps Doodlebob into a book were he stays and smiles. Patrick and Spongebob decide to shoot the pencil back up to the surface where it belongs.